Five most common questions planners are asked

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Visiting a financial planner can be a little daunting. To help put you at ease and better understand the financial concerns people have, we asked Kane Jiang, Director of AA Financial Planning, the most common questions planners are asked.

1. Do we have enough for retirement?
When meeting with clients I often hear them say, “I went to my super retirement seminar, and they said you’d be fine if you have a certain amount (say half a million dollars) to retire. I have that already, so I should be fine. Shouldn’t I?”

I find this question alarming, as this kind of general advice rarely considers an individual’s circumstances. These seminars don’t take into account the various potential expenses incurred during retirement, such as buying a new car, renovating your house, helping your children with a home deposit, or allowing for the type of holidays you like to go on.

These kinds of seminars rarely address risk. What if we have another global financial crisis (GFC)? What if the Age Pension no longer exists in 10 years’ time? What if you live to 98 years old?

Moreover, these seminars rarely emphasise the assumptions used in the projection examples. What earnings do they use? I’ve attended seminars where the projected return of investment was 10 per cent per annum (justified by historical returns). But can your portfolio realistically achieve that figure in the future without taking a lot of risk (especially since you will no longer be working)?

2. What can we do to maximise our financial situation?
For one, you can maximise your finances by minimising unnecessary expenses. Debt is a bigger issue when you are close to retirement than when you are young.

Another expense that you may be able to minimise is tax. Luckily there are many strategies available to minimise taxes, especially when you are closer to retirement age.

You can also improve your financial situation by maximising income. Clients probably have more control over their own exertion income, such as wage/salary or self-employment income, but financial planners should be able to help you maximise returns on your investments.

3. What sort of returns can we expect if we invest through you?
Firstly, you should be aware of anyone who has promised they can double your money in a short time. If they have such a skill, they would not be in a consulting business, as they would have been doing it for themselves!

If you want high returns you will have to deal with more uncertainty.

Rather than focusing on percentage returns, you should work closely with your financial planner to discuss your risk profile, investing horizon and investment strategies along the way. Sometimes solid advice from your financial planner could be as simple as them saying ‘put all your money in the bank’!

4. How much are your fees?
Every financial planner has a different client value proposition. Some start with charging a few hundred dollars, and some may charge in the tens of thousands. Some charge using a ‘fee-for-service’ model, while others may receive commission.

What you need to ensure is that your financial planner is someone who is licensed to provide financial advice. You can check the ASIC professional register for this. And believe me, it is not cheap to get licensed as a financial planner.

And don’t forget that financial planners also have to pay rent, invest in office systems, commit to ongoing training, subscribe to professional bodies and research companies. This is all done in the name of providing a professional service that will look after your financial interests properly.

5. Why are your fees so high?
Although our existing clients would never say this to us, I don’t doubt there are many prospective clients that think this is the case when they decide not to proceed following our introductory meeting.

There are constant pushes from industry and regulatory bodies to enhance the professionalism of financial planners. As a result, we are now seeing fee structures include fewer commissions to minimise conflicts of interest. So, a fee-for-service model will become more common in future.

Since the GFC, financial planners are also expected to increase their compliance standards. For example, in our practice we keep file notes of every meeting. Even with prospective clients who do not proceed with any work with us, we can spend up to one hour on an initial meeting plus an additional 15 to 30 minutes typing out our notes. That’s up to 1.5 hours of unpaid work for only one prospect.

All these factors are likely to increase the cost of personal financial advice in the future.

But would you underpay someone to help you minimise tax, look out for investment opportunities, and manage your life savings and hard-earned dollars? Unless you’re fully confident of self-managing your finances, you are probably better off having a well-paid professional, answerable to you whenever you’re at a financial junction, at your call.

Kane Jiang (Dover Financial Advisers – AFSL no 307248) joined the financial planning industry in 2007 – just one year prior to the Global Financial Crisis! He has a Graduate Diploma of Financial Planning qualification and is also a Certified Financial Planner (CFP) Professional and a member of the Financial Planning Association (FPA) Australia.

The information contained in this document is general advice only and does not take into account your specific individual circumstances. Please contact AA Financial Planning if you are seeking personal financial advice suited to your particular situation.

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Total Comments: 14
  1. 0

    I think fees are a big issue. After the Government review and crackdown on super fes of all kinds I received a letter from my Super fund notifying me of a $100 = fee for regulation changes. When I contacted my advisor (I am always informed I must go through my advisr rather than contacting the Fund directly?) I was informed this was ude to the fund having to rewrite their programmes due to the cahnges. He could not tell me if this was a one off or an annual fee.
    Sounds like they are clawing back lost revenue. Does any one else have a similar notice?

    • 0

      Sounds like you have been ripped off . Your fund should bear their own business costs they get too much as it is

    • 0

      If I couldn’t contact my fund I’d change it. I don’t use an advisor. Find out who the fund administrator is and contact them as it sounds like a scam.

    • 0

      Hi 4b2, I actually had a new client referred to see me today having the same experience. Moreover he was not happy with his advisor as it seems that his advisor has not been proactive in managing his super too (for the ongoing fees that he and his wife was charged, eg. $6,000 p.a!). I explained the different options that he has moving forward, including the different super options (industry super vs. retail vs. smsf), the different fee structures different advisors charge (ours was definitely more competitive compared to his current advisor, and fairer in my opinion too!), investment options, etc. Let me know if you wish a complimentary introductory meeting with me. Kane

  2. 0

    this artice has very little information of value and more focused on what appears to be a frea free plug for the financial advisor .

    • 0

      Hi Fred, sorry to hear that you don’t find much value in this article. We are given a general topic to write about, within word limits, and obviously we can only discuss issues in general.
      May I ask how we can improve next time and what sort of topic that is of interest to you?

  3. 0

    Our first visit (free) to a financial adviser was the best thing we ever did as regards retirement. He gave us a budget form to fill out and an appointment was made for the following week. He went through the budget, discussed changes and made an appointment for 12 months later. He compared the budget estimate with actuals and then set up a plan for what we needed to do to enjoy a comfortable retirement. We followed his advice and are now happily retired. Contrary to what the media spews out, we don’t have $1.3M, far from it. People may be pleasantly surprised if they follow this method. It worked for us and I can’t see why it won’t work for many others.

  4. 0

    The first thing you need to do is understand your situation. You need to have some idea of what financial assets you have (super and cash), possible income from those assets and a budget based on current expenses and work out a new budget based on your expected income from your financial assets in retirement. Not rocket science and most people are capable of doing this.

    Next find 3 financial advisors and make an appointment with each. Give them your financial asset situation and then ask them questions based mainly around their experience, company situation/experience, services and of course fee structure. The main thing here is to primarily watch the advisor and determine from your own gut whether you believe or accept what they are saying. You don’t necessarily have to take in all the financial advice and figures as they are obliged to put into writing what they have told you and will send you a folder with their advice.

    When you have the three folders compare the figures paying attention to the fee structure and if you don’t understand something phone them and ask for clarification. You are the one who then decides which way to proceed. You may not get it completely right but at least you will have gained some more financial knowledge. Remember forewarned is forearmed and you will have tilted the scales in your favor a little more.

    • 0

      Totally agreed Captain. Too many people are getting into investments without really understanding what they are getting themselves into. The client I saw today got into his current super because his “sister’s friend” was the advisor. Fast forward 5 years and $30,000 in fees later he realised that he may not be getting value for money. With a sister’s friend like that I guess you don’t need a sister’s enemy!

  5. 0

    I wish a financial adviser could tell me how much ‘rainy day money’ retirees should have easy access to. If you lose your job they say 3-6 months but what if you are retired . I have a defined benefit pension but would love to know how much extra cash I should hold



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