Why you might need advice – even if you think you don’t

Tips to help you evaluate whether you need a planner.

So who needs a financial adviser?

Vitaliy Tsitalovskiy
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.

For more information, download the March edition of our Retirement Affordability Index™ in PDF format. For a refresher on how to read as an eGuide, follow Drew's instructions.

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    COMMENTS

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    Old Geezer
    27th Apr 2018
    10:54am
    Am I confident that I have the right strategies to maximise my Centrelink entitlements?

    No

    Who is going to tell me to buy a more expensive house, travel the world and give the rest away so I qualify for Centrelink entitlements?
    Anonymous
    27th Apr 2018
    12:18pm
    I doubt that you would listen to anyone anyway, OG, you seem to know everything!
    Richied
    27th Apr 2018
    12:30pm
    The majority of the industry appears to be focused primarily on how to get their hands on other people's money.

    The rorts to work around the rules continue (eg. financial planner must disclose direct interest/commission in any product or service they recommend, so they set up arrangements whereby they get indirect benefit. One way is for a company to set up a research subsidiary, and a financial planning subsidiary - the research arm works with developers and financial services to package products and compare them with others they've developed, and sells the research of those packages to the financial planner. The financial planner has no direct interest in the products or services - they bought research - and advises customers to purchase the 'best' product in that research. The research company gets a commission from the developer or financial services company, as well as payment for the research from the financial planner - who charges the customer for it)
    Old Geezer
    27th Apr 2018
    12:41pm
    Big Al I do my best to learn the rules and keep up with what is going on in the finance industry because I have now been looking for over 40 years for some one to give me good financial advice. No I haven't found that someone as yet and I doubt I ever will. So I have no choice but to learn how it al works myself.

    I have found lots of so called financial advisors that can't answer my hard questions along the way though. Have you noticed how they all say how good their product is but rarely show you their result unless you ask? Results to me speak for themselves.

    Years ago before online brokers I had a full service broker who used to ring me every morning to find out what I had in mind to trade that day. It didn't occur to me until awhile later that I was making money mostly because that broker and all his mates were using my ideas.
    Rae
    27th Apr 2018
    1:04pm
    A good trader can be very successful with hard work and plenty of research. Good on you OG.
    Hasbeen
    27th Apr 2018
    1:40pm
    I'm with you Old Geezer. I have watched the result of financial advisers advice twice with my parents, & another few times with their friends.

    From what I have seen it would be very hard for an uneducated simple oldie to lose their money as quickly as financial advisers manage to do it.

    I most definitely would trust the advice of a used car salesman, more than anyone offering financial advice for sale, or as a financial industry company adviser. A quick look at the banking enquiry should generate a lot of fellow travellers for me.
    Old Geezer
    27th Apr 2018
    2:24pm
    If you think you can trust a financial planner then give him a small amount of money to manage and see how he goes with it. I did this once many moons ago and lost $10,000 and so glad I didn't give him any more.
    Old Geezer
    27th Apr 2018
    11:12am
    Royal commission shows us why financial planning, in its current form, isn't worth the risk

    http://www.abc.net.au/news/2018-04-27/royal-commission-exposes-financial-planning-industry-lie/9700982
    Ted
    27th Apr 2018
    11:19am
    I have used a planner for several years but the Royal Commission has shown me that I should not trust planners who seem to be more sales people than professionals that I pay a lot too for very little return!
    Puglet
    27th Apr 2018
    5:56pm
    I am like you Ted. I have been reading the Guardian’s live feed on the RC with mounting horror combined with rage. I have invested my retirement money with the Commonwealth bank and it’s FAs. Just before the RC began the CBA refunded 13000.00 because I was charged for advice I didn’t receive so I am one of the people mentioned in the RC. I’ve kept a handle on what has happening and had a say in investment decisions but the trust has now gone. I want to take the lot out and go somewhere else. I need a FA but as a whole they have been shown to be a dishonest even corrupt lot and their professional standards organisations are probably more corrupt than their members! We just can’t win.
    Richied
    27th Apr 2018
    12:24pm
    My reason for not using a financial planner is not for the reasons given above. It is purely that I have absolutely no faith in the industry.

    I have used four financial advisors in my working life. One (a bank) 'stole my industry super and put it into a retail fund (I was very naive back then - luckily I was counselled how to take them to the ombudsman and got my money back, plus compensation - and they got a fine); one advised me to go into Great Southern (I late found that Great Southern was already in dire straits); one pushed me really hard to go into CFDs (even though my risk profile was conservative - luckily I didn't because 6 months later came GFC); and the other was totally incompetent (couldn't understand why I had a unit trust or whether it was better for me to keep an investment property or move funds somewhere else). I paid upfront for each of these services (again, naively thinking that would reduce the temptation for them to push products they'll make money out of).

    And to be clear, in NSW financial advisors are the ninth highest paid job (on average). They make squillions and provide sub-standard or incorrect advice. Even with changes to the industry over the last few years, they still priorities their own interests over the clients when making investment recommendations.

    if a financial planner came to me and said 'my fees will be paid as a percentage of the nett profits of your investments, on an annual basis', I might think they have my interests at heart. But at the moment I have zero trust in the industry.
    Old Geezer
    27th Apr 2018
    12:53pm
    Financial planners are nothing but salespeople who are told by who ever they work for what to promote. The number of independent financial advisors in Australia is probably less than 5%. I fail to see how a university degree or lots of training is going to make them any better at giving advice but will make them better salespeople. Personally I probably know more than the majority of planners but I make enough money to enjoy my current lifestyle without the stress of being a planner. I know the questions to ask and I know what the answers should be so if I get a different answer I don't just accept it but check it out for myself. Personally knowledge is the key here so that you can play their game to benefit you not only them.
    johnp
    27th Apr 2018
    12:25pm
    Yes, plenty of bad experiences for a lot of people. Just go to a good Industry Super Fund but check the ratings tables first such as
    https://investmentcentre.moneymanagement.com.au/

    https://investmentcentre.moneymanagement.com.au/news/752515/who-underperformed-in-the-aussie-equities-space?utm_source=Money%20Management%20Newsletters&utm_campaign=a48d34493c-EMAIL_CAMPAIGN_2017_08_15&utm_medium=email&utm_term=0_b1d5720151-a48d34493c-77217825
    Richied
    27th Apr 2018
    12:43pm
    Yep - that helps understand under-performers in equities space. Doesn't provide much for those in residential investments, or retirement planning overall.
    Rae
    27th Apr 2018
    1:01pm
    I took advice and acted on it. Then the Government changed all the rules and both Centrelink entitlements and Superannuation rules. The changes should have been grandfathered to avoid breaking the no disadvantage rule. I would have never predicted they would break that rule for the first time ever and neither would my advisors.
    Old Geezer
    27th Apr 2018
    1:04pm
    Best advice I was ever given was keep as much money as you can outside super and that has worked for me.
    Rae
    27th Apr 2018
    3:33pm
    Yes OG. My current savings and investments are outside super and I'm very glad for that.
    fearlessfly
    27th Apr 2018
    1:25pm
    "Talk to a bank" ??? Are you SERIOUS ???
    Rod63
    27th Apr 2018
    2:04pm
    "The most common........ Other options are to talk to your bank,"

    Just the worst possible advice, this has proven to be. That means you should take everything here with a big grain of salt.
    GeorgeM
    28th Apr 2018
    11:11pm
    Absolutely, NEVER go to a bank to get Financial Advice.

    Other than that, the article says "..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."
    They missed the most important reason - most people cannot find a decent Financial Adviser who is competent and actually delivers good results, and is not guided by self-interest & the pressure from their sponsors to sell their products. Once the Industry fixes these issues (not holding my breath), many more people might be interested to use their help!
    VeryCaringBigBear
    30th Apr 2018
    7:52am
    George system will never be fixed as it us flawed system right down to it's roots. Even the trading advisors get is flawed. I have seen what's in a couple of them. All they do is teach people how to be better sales people. All that psychology content is taught for that reason.
    johnp
    27th Apr 2018
    2:06pm
    Some good advice on this blog. Would like to know though what the Hard questions were where OG said "I have found lots of so called financial advisors that can't answer my hard questions along the way"
    Old Geezer
    27th Apr 2018
    2:13pm
    Simple when they tell me something I test them to see how much they really know.
    Old Geezer
    27th Apr 2018
    2:18pm
    I'll give you an example of one question most do not know the answer to and give the wrong answer.

    If I reached the age where I can access my super, meet a condition of release and put my super in the pension phase. Is my upper fund tax free for the whole financial year?
    Old Geezer
    27th Apr 2018
    2:20pm
    My birthday is the 1st January to make it easier.
    johnp
    27th Apr 2018
    2:28pm
    thats a good one and I assume it would be pro-rata ? Maybe I suppose it depends whether its the current year you reach that age and whether before or after the smsf tax return is submitted. I suppose it wouldnt make a great deal of difference in overall scheme of things though as hopefully there are still many years to run before end of life ;-)
    Old Geezer
    27th Apr 2018
    2:31pm
    A fellow I know asked me to accompany him along to see and a financial advisor as he was about to retire and had one of those schemes where his super payout was worked out his final average salary. This financial advisor wanted him to invest in back into their products. I just couldn't believe it when the advisor told this fellow that they had already looked after his money very well and he couldn't understand why he wouldn't leave it with them. Remember this fellow super was worked out on his final average salary and had no relationship whatsoever with how market performed yet this advisor was trying to tell this fellow he could expect same sort of returns from a market linked product.
    Old Geezer
    27th Apr 2018
    2:34pm
    Johnup the answer depends on when you took out your first pension payment. If you took it before your birthday it is prorated but if you don't take it out until after your birthday it is tax free for the whole financial year.

    27th Apr 2018
    3:44pm
    Nobody could tell me what shenanigans the Govt would be dreaming up in the future, and
    one fin. adviser told me to put most of my savings into super and be the time I reach 65 I could be a SFR. I never wanted to be self funded, had neighbors like that as well as people on the full age pension when I was 50 years old. I could never see the advantage of the first over the latter. One had a pension card and gets lots of concessions and the other has bragging rights about "Doing It MY Way". He also has the headaches of watching investments. Went thru the GFC 'only' 125k down the drain in super. Had recovered a bit before I took the lot out and lived on the cash till I got 65.
    No adviser would have told me that.
    Rae
    28th Apr 2018
    8:30am
    Very true and a good decision Jim.
    ozirules
    27th Apr 2018
    4:05pm
    Financial advisers, in my humble opinion, are as useful as a waterproof teabag. They take no risks on your behalf and they get paid their commission/management fee regardless of the performance of your investment. Better just to self manage using a risk strategy you are comfortable with and don't put all your eggs in one basket. As for Centrelink entitlements, just ask Centrelink. Not the counter jockeys but set up an appointment with staff specifically to discuss your assets/income stream and to run through any 'what ifs' you have in mind.
    Anonymous
    27th Apr 2018
    4:14pm
    Yes ozirules - got my advice from Centrelink, back office one to one talk with statements and PC printouts; never regretted it. Was told what's possible and what's not legal.

    27th Apr 2018
    4:32pm
    I got one for you lot. My wife had two uncles one who new a very trusted financial advisor who would kick him back plenty of commission the second uncle a retired Inspector of Police of some 40 years who would have received from his Superannuation a lump sum plus 4/5 of his current salary for life which was around about a $100,000 took the lot out and put it with the financial advisor who promptly put it in (a high paying commission fund to him) it was called Asguard now he has $200 in it and is fully reliant on the old age pension.
    I don"t think he likes financial advisers either.
    Rod63
    27th Apr 2018
    4:50pm
    There are very good advisors. The important points are they are paid for the hours they do, not commission, and they are not linked in any way to the investments they recommend.
    Richied
    27th Apr 2018
    4:59pm
    Each of the financial advisors I've engaged charged me 'by the hour', and supposedly so their advice was independent and not motivated by commissions.

    Not one of them provided advice that was advantageous to me, either because their companies 'encouraged them to sell company products, they got kickbacks through nefarious means, or they were incompetent (see my posts above).
    Rod63
    27th Apr 2018
    5:07pm
    I am suggesting people find one that doesn't belong to any company to sell their products. Not easy, i know.
    Richied
    27th Apr 2018
    5:23pm
    Agreed. Three of the ones I used supposedly had no relationship with any other company, and each clearly stated they or their company got no commissions from recommended products.

    I found out a couple of years later that one was employed by a subsidiary company of a group that also had a research company. The 'research' company got kickbacks from developers and financial services companies, then researched all those products and sold their 'research' to the financial planner company. The financial planner then recommended the 'best' products. So, they operated within the law, could hand on heart say they weren't getting material benefit from recommending products, but the parent company was making a motza.

    The other financial planner was incompetent (one recommended Great Southern, a few months before its collapse, but after industry already knew it was risky) and the other couldn't answer relatively simple questions.

    All were recommended by FPA.
    Rod63
    27th Apr 2018
    7:21pm
    Would that still happen now that the regulations have been tightened regarding the FSG? Full disclosure is now compulsory.

    I am very sorry that you have had such negative experiences.
    Adrianus
    29th Apr 2018
    10:06am
    Rod63, get real. You will not find a Financial Planner who is not associated with a legal and research team. If you did, they wouldn't be in business for long given the time it takes for research. Why not ask your Financial Planner how much their company spends on research?
    VeryCaringBigBear
    30th Apr 2018
    8:00am
    Where are the good advisors? No one would tell me to do what I did but it is financially the best strategy for retirement. One gets to enjoy their wealth with their family, live in a awesome house and travel the world all on the full OAP.

    Main reason no advisor will tell you this as their is no money in it for them.
    Rod63
    30th Apr 2018
    8:47am
    What DID you do, VeryCaringBigBear?
    Richied
    27th Apr 2018
    5:01pm
    Oh, and to those who suggest 'finding a good financial advisor', all four of the advisors I have used were recommended to me by FPA.
    Rod63
    30th Apr 2018
    8:48am
    What did you do?
    Eddy
    27th Apr 2018
    10:19pm
    My wife and I have a financial masterplan, We funded our daughter through a Business Degree with an accountancy major. She now works for an international financial management business and has access to some of the smartest financial brains in the country. She is our primary financial advisor. She has a splendid incentive to advise our finances properly, half of everything will be her inheritance some day.
    ozirules
    29th Apr 2018
    10:02am
    good one, Eddy
    Anonymous
    29th Apr 2018
    10:28am
    Lucky you! Most of us would be worse off with a financial adviser because most of them are either self-interested or incompetent.
    VeryCaringBigBear
    30th Apr 2018
    8:02am
    Agree OGR advisors act in their self interest. No advisor would advise me to do what I did as there is no money itn it for them.
    Adrianus
    29th Apr 2018
    9:59am
    I would be very wary of taking any advice from a financial advisor. During the last 10 years ASIC has virtually done nothing except separate a number of advisors from their licences. The 2 principals of Storm Financial have been fined just $70,000 each. They spent more than that on their chandelier.
    ASICS reluctance or inability to lay charges, coupled with their preference to negotiate with licence holders has sent a very dangerous message to the industry and its consumers.
    Watch your back people!
    ex PS
    30th Apr 2018
    7:42am
    Just find a Financial Adviser, not a Sales Representative as used by banks. I saw an adviser and although he mainly just confirmed that I was on track with my own plans, he did help refine what I was doing and save me from making a couple of rookie mistakes.
    It is advice, it is entirely up to you which bits of advice you take. To me it was money well spent, just be careful who you choose to go to for advice, find someone who has had a good result and get the name of their adviser from them.
    It is really just common sense.

    2nd May 2018
    5:35pm
    My name is Milagros Riverva from United States, I’m sharing this testimony to give thanks to Dr.Edward Arabba who helped me to bring back my EX lover that broke up with me 4 months ago.I have been looking for advice on what to do and how to get back my EX lover but all my effort prove fruitless until when i came across a post of a woman in USA called Gloria giving thanks to Dr.Edward for helping her to get back her husband. I contacted the spell caster for help due to the fact that i needed my EX lover desperately because he is my husband and my life. To God be the glory my husband came back to me within 48 hours after Dr.Edward finished preparing the Reunion love spell and i want the world to join me and thank him for helping me. Anyone reading my testimony and also need his help should contact him with his below details.
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    2nd May 2018
    5:36pm
    My name is Milagros Riverva from United States, I’m sharing this testimony to give thanks to Dr.Edward Arabba who helped me to bring back my EX lover that broke up with me 4 months ago.I have been looking for advice on what to do and how to get back my EX lover but all my effort prove fruitless until when i came across a post of a woman in USA called Gloria giving thanks to Dr.Edward for helping her to get back her husband. I contacted the spell caster for help due to the fact that i needed my EX lover desperately because he is my husband and my life. To God be the glory my husband came back to me within 48 hours after Dr.Edward finished preparing the Reunion love spell and i want the world to join me and thank him for helping me. Anyone reading my testimony and also need his help should contact him with his below details.
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    johnp
    3rd May 2018
    9:14am
    Scams should be banned from this site