Most recently, ASIC filed a report revealing a high level of mistrust against the financial advice industry.
And while there’s an urgent need for the provision of comprehensive financial plans for Australians, the exposure of unlawful practices has led to general wariness, requirements for remediation and, ultimately, a shrinking advice sector.
To help you understand the difference between good and bad advice, Steve Waters from Right Property Group has shared some simple tips and strategies to help consumers in the oftentimes difficult quest for access to good advice.
But first, people need to be aware of the difference between opinions and advice.
“Put simply, while everyone is entitled to their opinions, they often lack the weight of evidence to make them valuable,” according to Mr Waters.
“On the other hand, advice is founded in experience and knowledge and provides useful guidance.”
And while this can seem confusing, the solution can be simple, according to the property director.
Once you can separate your opinions from your advice, here’s how Mr Waters said consumers can be sure the advice they are accessing is good:
1. Surround yourself with qualified people.
“Qualified people can provide facts and experience-based advice to you based on their own field of expertise,” he explained.
2. Seek those with real-life experience.
“It’s hard to give quality advice if you haven’t ‘walked the walk’,” according to Mr Waters.
He said that “a great test is to see if they’ll happily share their mistakes as well as their wins”.
“If someone is willing to talk about losses as part of their own experience, they’re a value asset,” he continued.
“Learn from their errors.”
3. Look for proactive advisers, not reactive ones.
According to Mr Waters, tax accountants are a great example here.
“In my book, good accountants are very few and far between,” he offered, as with most, you’ll get to the end of the financial year and they’ll give you their opinion on what you should be doing now to minimise tax.
“On the other hand, great accountants will advise you well in advance – usually at the start of the financial year – as to the strategy you’ll employ to boost your tax return.”
While implementing the above strategies can take some work, Mr Waters said “it’s well worth learning to separate opinions from advice”.
“It may just save you a world of pain and a costly loss.”
