Friday, July 15, 2011

TAXI or SMSF - which will take you further?

I couldn't wait to write this entry as a matter of record that I had an interesting and insightful conversation with a Melbourne taxi driver yesterday evening. It wasn't about the Prime Minister, carbon tax, boat people or religion - it was about money. Specifically, it was about the money in the taxi business.

I use a regular group of taxi drivers who operate a network within a network as quality service providers. All mobile phones, spooks and airport drama. There may even be sex involved, although I haven't encountered it yet.

Yesterday evening's driver owns his license and cab. Another driver I frequently use has four licenses. These are guys ranging in age from 45 to late 50s, the sort who should be starting or well-advanced in executing financial plans to ensure a comfortable retirement. As self-employed bods, they are probably candidates for a Self Managed Super Fund (SMSF).  The thing is, that these guys don't need an SMSF - they're driving around in it.

Yesterday evening's conversation revealed that:
  • A Melbourne tax license is worth $500,000 (if you have four you therefore have two million big ones);
  • A good cab and driver delivers revenue from $180,000 to $200,000 a year;
  • Cabs are serviced about every three weeks for about 60 bucks (oil and filter change), by some guy who literally operates a drive-through service operation with 20 mechanics (probably another multi-millionaire);
  • The cab lasts about 6.5 years;
  • Despite Ford Australia's protests, you can service a six-speed transmission and not replace it every 200,000km (this is not a financial insight, just an interesting one to anyone like me who use to spin for Ford).
So an owner driver shuttling you around town is probably richer than you are, possibly grossing 720G a year less expenses and sitting on a debt-free capital asset outside of the family home that most of us would give our left nut for (sorry girls). Why debt-free? Most of these are tightly held from the days when 'G' was better known as the first letter of 'goat' rather than 'grand' and licenses were dirt cheap.

And retirement planning? Farm the cab out to some other dudes willing to tour the town with punters of unknown origin. The money (slightly less of it) will keep rolling in.

So how do we market super to these high net worth cabbies? They just love the drive-through service guy. Perhaps a drive-through set up with an interactive join and contributions screen, free boulevarde coffee mugs (if you don't know what I mean, visit LA) and a long-range client breathalyser warning device, might be the go.

On the other hand, they might just tell you they've already got it sorted better than you have. These days the a TAXI license seems far more lucrative than an AFSL (Australian Financial Services License).

Meter's running, I gotta go...

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