Tips to help you evaluate whether you need a planner.
An overwhelming number of YourLifeChoices members surveyed in the Retirement Income and Financial Literacy Survey 2018 said they believed they didn’t need a financial planner. In fact, 86 per cent said they managed their own financial affairs and 65 per cent said they understood finances and investments either well or very well.
In my experience as a professional financial planner, I’ve found the most common issues facing retirees are that they either leave it too late to get their retirement planning in order or that retirement is forced on them earlier than anticipated due to illness or losing a job.
Research commissioned by AustralianSuper and conducted by Investment Trends in 2017 found that three out of four (75%) Australians have concerns relating to retirement adequacy with the highest unmet advice need being retirement planning and retirement adequacy.
The report also noted that the most common reasons Australians don’t seek advice is because they feel they don’t have enough money to get advice (they think they’ll need at least $250,000 to make it worthwhile) or because advisers cost too much.
As you might expect, I firmly believe that the right type of advice, at the right time, can make a real and significant difference to your financial wellbeing. Just as importantly, it can also give you confidence that you’re on track and have the correct strategies in place.
I need to stress here that advice is not just about investments and investment returns. Getting an extra return on your investment is all well and good, but it pales into insignificance when the correct tax or Centrelink strategy might boost your annual income significantly more. Advice is also about setting realist and achievable financial goals, getting any government assistance you're entitled to, protecting your assets and feeling in control of both your finances and your life.
Advice could be about getting the right answers to some important questions, such as whether you should be working longer or downsizing the family home, whether you are able to buy that new car, go on an overseas trip or help the kids with their home deposit.
Crucially, it could be about avoiding making potentially expensive mistakes because sometimes you just don’t know what you don’t know.
In trying to evaluate whether you need financial advice, you could ask yourself the following:
- Am I confident that I have a good working knowledge of investment markets?
- Am I confident that I have a good working knowledge of the taxation system and the rules that apply to superannuation and investments?
- Am I confident that I have the right strategies to maximise my Centrelink entitlements?
- Do I enjoy reading about money, super, tax and investment markets?
- Do I have the time (or the inclination) to monitor, evaluate and make periodic changes to my portfolio and/or my investment strategy?
- Am I confident that I have the right strategies in place to protect my income and assets into retirement and that my money will last long enough?
If you answered ‘yes’ to the above questions, you may be right in thinking you don’t need an adviser, and you can go about your business. But if you thought ‘no’, ‘maybe’ or ‘I’m not sure’, then you may need to consider getting some help.
Similarly, if you feel a little ‘lost’ in planning for your financial future or you just don’t want to deal with it, then seeking some professional help could be beneficial.
If you’re still not sure, a great place to get some more information is ASIC’s MoneySmart website. The website includes a variety of tips and resources regarding financial advice, including the option to download the ‘Financial advice and you – Where to start’ information booklet.
Should you decide you need help, where do you start?
The most common first port of call is to ask friends or family for a referral. Other options are to talk to your bank, your superannuation fund or your accountant. Professional associations such as the Financial Planning Association (FPA) can also help put you in touch with a suitably qualified professional adviser.
The good news is that most financial planners these days offer a complimentary introductory meeting. This meeting is a terrific opportunity for both you and your prospective adviser to get to know each other.
Your prospective adviser should start by asking you about your personal and financial circumstances, what sort of advice or services you’re looking for, your preferences and attitude to risk and so on. This will help the adviser determine how he or she can help you and how much work will be involved. At this point, they should also be talking about any fees that will be involved.
This is your chance to ask lots of questions to help gauge if the adviser is the right one for you and your needs. Here are some questions you may want to consider:
- What qualifications do they have?
- What experience do they have: how long have they been an adviser and what types of clients do they usually provide advice to?
- What sort of advice can they provide? Some advisers can provide only limited or specialised advice and may not suit your needs.
- Are they licenced under an Australian Financial Services Licence (AFSL)? If you haven’t already received their Financial Services Guide (FSG), ask for a copy.
- Are they a member of any professional associations?
- How do they charge for their services? This might include a mixture of initial and ongoing fees.
- How do they get paid? Base salary, bonuses and/or incentives…?
Good luck with any future decisions.
Vitaliy Tsitalovskiy works for AustralianSuper, the nation’s largest superannuation fund. He is a degree qualified Associate Financial Planner with more than six years’ experience in funds management and financial planning. His speciality is maximising Centrelink payments, tax planning and making the most of super for your ideal retirement. This information may be general financial advice, which doesn’t take into account your personal objectives, situation or needs. The views expressed are those of Vitaliy Tsitalovskiy and not AustralianSuper. Authorised Representative No. 1003998.
Financial disclaimer: All content on the YourLifeChoices' website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care, but no guarantees are provided for ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness with regard to your circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances. Financial comments provided by readers cannot be relied on as professional advice, but as general comments only.