Financial knowledge is power, says finance editor Kerrie O’Brien.
There are many avenues through which to source information about your finances when approaching retirement. Here we examine the major options available - the government, financial planners, accountants and seminars. You may choose to use one or all of these to help determine your plan of attack.
Government
The Financial Information Service
Centrelink’s Financial Information Service (FIS) is a free and independent information service available to everyone in the community.
FIS assists people by providing information on their financial and lifestyle options, explaining various financial concepts, accommodation and housing needs, basic taxation requirements and what the social security system can do for them. This information helps them to make
informed decisions about their current and future needs.
The service is provided by phone, by appointment and through seminars.
What sort of people use the service?
A wide range of people from those in their twenties through to retired members of the community are attracted to the FIS service. Those embarking on their first investments or wanting to get started on a budget; those interested in topics such as mortgage options, insurance options, share and property investments, salary packaging, or superannuation; to those who wish to review their existing plan all benefit from the service.
What sort of service does FIS offer?
The range of services offered includes a national seminar campaign, a community education and information program. Seminars are conducted in many venues and locations in every state and territory and cover a wide range of investment and lifestyle topics. Many seminars have guest speakers from other government agencies such as the Australian Taxation Office, or from the various industry groups. Comprehensive take away information products are always available.
Seminars may be run in workplaces, during and after work.
Information sessions are also provided to industry groups and community groups.
The Financial Information Service officers also provide personal interview services either face-to-face or on the telephone.
How is the Financial Information Service different from the financial industry?
FIS officers are not part of the financial industry and are not financial planners. They do not give or sell advice or purchase investment products.
The role of FIS is to:
- Provide people with expert financial information
- Increase their confidence to deal with financial issues
- Assist them to understand their own financial affairs and the options available to them
- Alert them to the levels of risk associated with the different financial products and
- Introduce them to the roles of the different experts in the financial industry and other associated industries.
What do people gain most from seeing a FIS officer?
People leave more confident and encouraged to plan their finances to meet their current needs and to undertake retirement planning and to understand that social security entitlement is only one option open to them as they plan their retirement. They will also be better able to deal with industry representatives who will be selling them financial products and offering them financial advice.
HOW TO GET IN TOUCH
To make a FIS seminar booking or to enquire about seminar topics call the Centrelink National Seminar Booking Service on 136357 or email to fis.seminar.bookings@centrelink.gov.au
For a FIS officer to attend your workplace call 136357
For sessions available to community groups call 132300
To make contact with a FIS officer call 132300
For booklets, leaflets and factsheets call 132300, or visit the Publications page at Centrelink’s website at www.centrelink.gov.au
Financial Planners
Financial planning is the process of meeting your life’s goals through the proper management of your finances.
When developing a financial plan for you, professional financial planners use a six-step process. The process involves gathering relevant financial information, setting life goals, examining your current financial status and coming up with a strategy or plan for how you can meet your goals given your current situation and future plans.
Financial planning provides direction and meaning to your financial decisions.
It allows you to understand how each decision you make affects other areas of your finances.
By viewing each financial decision as part of a whole, you can consider its short and long-term effects on your life goals. You can also adapt more easily to life changes and feel more secure that you are on track to reach your goals.
A Certified Financial Planner (CFP) is an internationally recognised mark for professional financial planners. A Certified Financial Planner practitioner has extensive industry experience and undergone rigorous study. The qualifications gained by a CFP practitioner are well in excess of those required under current Australian law.
A CFP practitioner sees financial planning as an holistic process taking into account all aspects of your financial and personal situation to tailor a plan to help meet your life goals.
Financial planners can charge with a fee for service; a combination of fee and commission; or commission only.
A financial planner can charge a basic flat fee of $500 to $1,000 for a written financial plan. They may however, charge for the time spent assessing your needs and preparing the financial plan. Hourly fees can be anything from $100 to $400 per hour with $200 being a common charge when the planner does not retain any commissions from product providers.
Commissions are usually taken out of the amount you have to invest and usually range from 1.5 per cent to four per cent. There are different commissions for different products and you should ask your adviser for a dollar amount – not just a percentage.
Ask for a full written breakdown of fees, commissions and charges for each investment product and for the preparation of the plan.
Do not proceed with any financial planning advice unless you fully understand it, and if you do not, always seek a second opinion from a qualified professional.
Questions to ask when selecting a Financial Planner:
- Do you have an ASIC license or are you properly authorised to represent a licensed adviser?
- Are you a member of the FPA or the Australian Stock Exchange?
- What experience and qualifications do you have?
- What information do you base your advice on?
- Do you have professional indemnity insurance?
- What services can you provide?
- Is there anything you don’t advise on or cannot sell me?
- How are you paid? Ask about fees and commissions.
Of greatest importance in choosing a financial planner is selecting one who is qualified, experienced and licensed to help you. The Financial Planning Association (FPA) is the peak body for specialist, professional financial planners.
If you are unhappy with your financial planner or the advice they have provided firstly, raise your concerns with your financial planner and their company. All members of the FPA must have internal complaint handling procedures. If you are not satisfied with their response you can then lodge a complaint with the FPA, the Financial Industry Complaints Service (FICS) and the Australian Securities and Investments Commission (ASIC), the industry regulator.
Contact: FPA1800 626 393
Accountants
You may find that your accountant is also a certified financial planner. CPA Australia has recently introduced a financial planning designation for members working in the financial planning field. Look for the designation CPA (FPS) (Financial Planning
Specialist).
To become a CPA, you must complete a degree in accounting (or related discipline), completed the CPA program and have at least three years work experience. Members must then demonstrate experience and education specifically in financial planning.
This ensures your CPA has:
- Education and experience specifically in financial planning; and
- Has successfully completed the CPA (PFS) examination.
In a country where anyone - even those without a degree in accountancy - can claim to be an accountant, the CPA designation remains one of the few genuine assurances of professionalism available to the public.
Members of CPA Australia hold a relevant degree, many with post-graduate qualifications and all have satisfied stringent work experience requirements.
Members also commit to on-going professional development and agree to abide by a voluntary code of conduct.
All licensed securities dealers belong to a Complaints Resolution Scheme, which can help mediate if the relationship breaks down.
Eliminate anyone who:
- has no licence or written authority to represent a licence holder;
- has no advisory services guide, or does not voluntarily provide you with a copy;
- has no professional indemnity insurance;
- attempted to sell you products during the first meeting; or
- made you feel pressured to sign up for any sort of investments.
Contact: CPA on Ph. 03 9606 9606 or Web www.cpaonline.com.au
Finance Exhibitions
If you’re looking for advice on what investments to make, seminars may prove a source of valuable information. A number of companies run such events, featuring a range of experts covering all manner of investment information. One example is The Investment Expo to be held in Melbourne, October 25-27, 2002, featuring keynote speakers David Koch, Noel Whittaker and Harold Bodinnar. The Investment Expo offers hundreds of investment products under under one roof over three days. Visitors can meet experts f
rom companies including financial planning, accountants, banks, stockbrokers, fund managers, home loans, retirement planners, trusts and alternative farmers, and evaluate their information in an objective environment.
AES Investment Expo 2002, Sydney 19-21 April,
Melbourne 25-27 October Ph 03 9261 4500
Web www.investmentexpo.com.au
New legislation designed to make it safer for investors to seek financial planning advice came into effect in March. Called the Financial Services Reform Act (FSRA), the legislation signals a new era for the financial services industry by improving advisor standards and putting in place measures to protect investors.
FPA chief executive, Ken Breakspear, says the FSRA means for the first time, every professional providing financial advice and services must comply with a common set of advice standards.
"This is a significant step forward for one of the fastest growing professions in Australia and I hope it will lead to investors having more confidence when seeking financial planning advice," Mr Breakspear says.
Under the FSRA, financial advisers will have to apply for a new Financial Services Licence and meet specific standards set down in the areas of training and education, professional conduct, compliance and disclosure.
These improvements will assist investors obtain honest competent advice and make sure their adviser is made accountable if things ever go wrong.
"Investors will now be able to compare products and recommendations, be fully aware of all costs, fees and charges their adviser may receive, have access to independent complaint handling schemes and utilise the 14 day cooling off period to exit an inv estment without penalty," says Mr Breakspear.
The FSRA applies to all professionals who provide financial advice such as financial planners and investment advisers, life and general insurance brokers and superannuation fund advisers.
These article and many more,
were in the
(15th edition) of Your
Retirement, Your Life.
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