Why financial advice is worth getting

You’ve probably read more than a few articles touting the importance of getting financial advice when investing. There’s certainly been no shortage of them in recent times. But while it might be tempting to dismiss them as ads for investment companies seeking your business, it’s sound guidance.

Getting professional advice from the right people should give you a better chance of attaining a good financial outcome. But it can also provide another benefit – knowledge. And a new report from financial advisory services company Findex illustrates this point well. 

Released in April, the Superannuation Retirement and Insights report shows that those who receive advice have a far greater understanding of their investments and options. It found that 73 per cent of advised Australians showed a “markedly higher understanding of their superannuation investments”.

Further, that higher understanding extended to “contribution strategies and access options”. By contrast, only 47 per cent of unadvised Australians showed a similar level of understanding.

Why understanding is an important component of financial advice

Many Australians might prefer a hands-off approach to investments: “I’ll leave it to the experts; they know what they’re doing.”

If you are comfortable with that approach, that’s fair enough. If your advice is good and the outcomes are too, everyone wins. However, I can cite two reasons why taking an active interest in an adviser’s words helps me. And I’m sure I’m not alone in this.

Firstly, I tend to get anxious about things that affect me, but that I don’t understand. The less I know about something that affects me, the more likely I am to ruminate about it. “What if this happens?” “What if I don’t have enough money when I’m 75?”

For those like me who suffer from anxiety, this can be quite debilitating. But once I seek and obtain appropriate financial advice, the ruminating subsides dramatically. “If this happens, then we’ll do that.” “If we do this, we’ll reduce your chances of not having enough money when you’re 75.”

Finding out too late

Of course, that’s me. Not all Australians are affected that way. And for those that aren’t, that’s great. But it brings me to my second point. Even if you’re not one to dwell on what may or may not happen in the future, you might not react well to an unexpected outcome.

By ‘unexpected outcome’ in this case, I’m referring to finding out down the track that your financial position isn’t as sound as you’d anticipated. This takes us to the heart of good financial advice. 

Good financial advice is not necessarily a guarantee of riches. Good advisers will explain the risks involved in different strategies. They will tell you that option A could double your wealth over five years but if market predictions are wrong, you could lose half. Or that if you choose option B, your investment will deliver a 20 per cent return, guaranteed. 

That same good adviser will also canvass other options and help you choose which one best suits your mindset.

The depth of understanding financial advice can provide

The examples above are obviously relatively generic and simplified. The complexities of things such as superannuation require significant expertise. 

For example, 41 per cent of Australians have little or no understanding of when super can be accessed. That’s one of the findings of the Findex report. Further, 43 per cent of Australians show little or no understanding of the different ways of contributing funds to super. The same proportion has little or no understanding of how their super is currently invested.

And more than half of Australians (54 per cent) show that same lack of understanding about the tax concessions available through super.

The Findex report is a timely reminder that investment and superannuation can be complex. Seeing a registered financial adviser can give us an understanding of how those complexities can be managed. In turn, this will increase our chances of a sustainable financial future.

And I, for one, will feel a lot less anxious as a result. 

Do you seek regular financial advice? Or do you shy away from such matters? Let us know via the comments section below. 

Also read: How inflation can dent retirement savings

Disclaimer: All content on 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 the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own 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.

Andrew Gigacz
Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.
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