We’re in the midst of a perfect storm at the moment – faith in financial advice has been severely damaged by the findings of the Royal Commission, but the need for financial advice is greater than ever.
Australia’s increasingly complex taxation, investment and superannuation systems makes financial advice critically important, particularly with the onus being placed on individuals to fund their own retirement where they would rather not fully rely on government support.
Those of us working as financial advisers must find a way to help people understand how professional advice can benefit them, and how they can find the right financial planner for them.
“After all, choosing a financial adviser is not something people do every day and it can be slightly intimidating. People may be concerned about their own lack of knowledge, or fear that they aren’t wealthy enough to justify getting financial advice.
These concerns often stop people from seeking the right professional advice.”
Some tips for people considering whether to talk to an adviser include:
More than just investments
Financial advice isn’t just about investments – financial advisers can also help with estate planning, managing superannuation, aged care needs, and insurance requirements, as well as other family issues.
For example, consider a situation where your parents are becoming older and frail. One of them may need ongoing medical care while the other needs a bit of extra support. What options are available to you? How do you pay for it? What happens to your parents’ assets, including super? A financial adviser can help with this.”
There’s usually no cost to the first conversation with a financial adviser, and nothing to lose.
Feel free to meet up with a few advisers, to get a feel for the way they communicate, the kinds of services that they offer, and whether they seem to fit with your own style and requirements. Don’t be afraid to ask questions. Does the adviser make things seem complicated, or are they able to explain it in a manner you understand? If you don’t understand the answers, the adviser needs to explain them better.”
Make a list
It’s a good idea to note down all the things you might benefit from help with, before talking to an adviser.
There is a range of areas that financial advisers can assist with - from insurance and superannuation, to estate planning, children’s education, and mortgages.
In particular, for anyone who is intending to purchase a property; is getting close to paying down their mortgage to 50% of the home value; is five years away from retirement; is transferring wealth to the next generation; earning over $100,000 a year; or getting married or starting a family, should think about talking to a financial adviser.
Get the details
Make a list of the questions you want to ask – for instance, how are fees calculated and paid? Is the adviser attached to a financial organisation? Are they remunerated differently depending on what recommendations they make?
It is important to be comfortable with the value being provided, before making a decision.
Also, it can be a good idea to ask how much time and effort will be required on your part to manage your financial affairs, to make sure you understand how the process and the relationship works.
Prioritise your goals
Last, but most certainly not least, is ensuring that you have identified the goals that are most important to you, and that the advice you receive also prioritises them.
Does the plan suit your risk profile? Does it take into account your family situation, for example supporting a family for the next, say, 15 years? Are you able to access money in a hurry should you need it? How tax effective are the recommendations being proposed?
It is only then that people will truly be able to assess the value of the advice that they are receiving.
Michael Hutton, Head of Wealth Management at HLB Mann Judd Sydney.