Financial planning myths busted

It’s easy to come up with reasons not to visit a financial planner.

Financial planning myths busted

Visiting a financial planner is about as appealing as a trip to the dentist and it’s easy to come up with reasons not to bother. However, as it’s Financial Planning week, we thought we should try and convince you otherwise.

Reason 1 – I don’t have enough in savings to worry about seeing a planner.
It may seem as though the less you have, the less you need to see a financial planner, but nothing could be further from the truth. Getting your money, however little you have, to work most effectively is the first step in easing your financial strain in retirement.

Reason 2 – None of them can be trusted
Ok, so the financial planning industry is suffering from a reputation bashing, and rightly so. However, you can’t tar all planners with the same brush. Although it may take a bit of time and a few face-to-face meetings, it’s worth sticking with the search to find a planner who understands your needs and can meet them.

Reason 3 – Planners charge too much
Of course you will be required to pay a fee for financial advice, but you need to think of it in terms of the possible return on investment. The first appointment should be free. During this meeting any applicable fees should be stated. Fees can vary greatly between planners, so it’s worth asking up front what you can expect to pay. And bear in mind that you can actually negotiate on the fees quoted. If you decide to go ahead with the planner’s advice, they are required to provide a Statement of Advice. As a guide, simple advice should cost between $200 and $700, whereas more complex financial affairs might mean a cost of anywhere between $2000 and $4000 as an upfront fee.

Reason 4 – I’m capable of managing my own money
While no one can dispute your ability to manage your own financial affairs, it’s worth noting that you don’t know what you don’t know. Legislation and rules are constantly changing and taxation is extremely complex. Failing to keep on top of such changes could end up costing you a lot of money.

Reason 5 – I’m in retirement so there’s little point in changing my plans now
Nothing could be further from the truth. Once you have spent a few years in retirement, you should be more aware at just how difficult it is to fund a modest or comfortable lifestyle. Simply sticking to a plan long-term does not make it work; you should review your plan every couple of years to ensure your money is working as hard as you have.





    COMMENTS

    To make a comment, please register or login
    Getting Older...
    27th Aug 2015
    10:00am
    If financial planners actually gave advice rather than pushing products that they get commissions on then the industry would not have the bad rep it has... I am very savy with equities and derivatives yet when I went to a few financial planners to see whats legal to do and whats not they were not interested in giving financial advice just "here buy into this managed fund and let us do it for you"... talk about not listening to your customer!
    LiveItUp
    27th Aug 2015
    5:06pm
    Nothing worse than seeing a financial planner who doesn't have a clue what you are talking about. eg How many planners would even know what covered calls were let alone how they work or how to create a plan with them in it?

    Managed funds to me make everyone else rich and I get the scraps if there is anything left. Not only that they are old hat when one now has EFTs and similar investments available with low fees. Ooops I forgot no commissions in these.
    MICK
    27th Aug 2015
    8:50pm
    I understand that Financial Planners can become that after a 12 week course. I have been at it for 40 years and still have a lot to learn. Whilst I may not be privy to insider information and whilst I do make mistakes I can say that I DO NOT TRUST THE INDUSTRY so I'll make my own way.
    Good luck to everybody else.
    dirtgirl
    27th Aug 2015
    11:43am
    My husband and I have never consulted a financial planner and have no intentions of doing so. We have watched friends and relatives taking advice from these 'sharks' and every one of them has lost money, some, considerable amounts. We are far from wealthy, but over the years have done our own investing by carrying out research and with careful spending we will make our money last. Financial planners appear to have one goal ' making as much money as they can for themselves, without any thought for the pain they cause others'
    Hasbeen
    27th Aug 2015
    11:51am
    I once worked for Telford Property Trusts. Running their marine division, it was pretty obvious they were in trouble with investment returns. Many properties were struggling to break even let alone generate the high returns promised, but they were the darling of the financial investment industry.

    When they went broke it became obvious that senior management had been operating very illegally, but authorities charged with overseeing the industry were totally incapable of seeing what was going on, or stopping it.

    A couple of directors ended up in prison, which did nothing to help the hundreds of grandmothers who had lost their nest eggs.

    Other friends were advised to use various trusts &/or managed funds. In both instances they either lost money, or had it tied up for long periods, when the funds got into trouble.

    That bad reputation the planners have, is very well deserved. Any wise person will stay a very long way from them.
    MICK
    27th Aug 2015
    8:52pm
    Unusual that anybody ends up in prison. Given that the crooked bankers who caused the GFC through corrupt business dealings got off Scott free and that Australian white collar criminals rarely get a custodial sentence I suggest that your situation must have been different....or from the past when we had a proper and fair judicial system and the crooks did hard time.
    AlanM
    27th Aug 2015
    12:34pm
    RE: Financial Planning week, we thought we should try and convince you otherwise - NO
    mangomick
    27th Aug 2015
    1:03pm
    Financial planning week. Whats the saying? Fooled me once shame on you,fooled me twice shame on me....

    luckily I have never used one but have heard plenty of stories of people who have lost plenty through bad advice. I'll pass thanks
    Alufool
    27th Aug 2015
    3:45pm
    Having worked in the finance industry for 30 odd years- it amazes me that people are still trying to solve the WRONG problem. MOST people do not need a financial planner as their options are the same (you do if you are a high income earner as there are many tricks to save money(read tax)). Unfortunately people are passive when it comes to finances and so this is why financial planners (salesmen) exist to get you into action.
    Chef
    27th Aug 2015
    3:56pm
    Plan, Budget be prepared to adjust. However, above all stay away from Financial Advisers UNLESS you able to confirm their ethics and their remuneration is linked to your funds earnings not simply a fee based on funds under management or the like and any commission they may receive from investing your funds should be directed back to you. So I guess that would eliminate Financial Advisers.
    fastbucks
    27th Aug 2015
    4:45pm
    I visited a so called independent planner not long ago. He stated his independencs but on his company documents it made some comments about being related to ANZ. Then upon looking at the only strategy he suggested, I looked into the company recommended and behold, it is owned by ANZ.

    No thankyou, I will do my own.
    Anyway when markets go down, the planner still takes his unadjusted cut
    Jim
    27th Aug 2015
    5:09pm
    I agree with most of the comments, and it would seem that the majority of people feel the same way, there is very little transperiancy in the financial advisory industry. The government needs to step in and get this industry sorted out, a lot more of us may need less support from the government if we were not getting ripped off by these thieves, after all what other industry can charge rediculous fees even when they lose your money, they should be paid on performance, if your investment goes down then they shouldn't get paid. If I take my car for a service and the mechanic stuffs it up he has to put it right at his expense not mine.
    Nan Norma
    27th Aug 2015
    5:11pm
    Only went to a financial planner once to invest in superanuation. Within about two weeks lost about $15,000 because of the GFC. Thanks to all you wise people as you confirm my thoughts.
    No more planners for me.
    MICK
    27th Aug 2015
    8:55pm
    In all honesty the GFC caught even the best of planners unawares. Not their fault. Now all the losses have been recovered...and some.
    I still would not touch the industry with a 10 foot barge pole.
    Nan Norma
    28th Aug 2015
    8:06am
    If I'd never gone to see the financial planner I'd never have lost so much money before that I used term deposits. Never lost a cent.

    27th Aug 2015
    8:34pm
    I remember one financial planner did not know what an Insurance Bond was? Helloo!!
    Have had two planners; both useless, never heard from them except when they wanted me to go into a different fund which gave them more commission.
    Another one put me in a fund which was high risk and I lost 25% of my investment in one month. Could not explain to me why he had put me in this fund. I actually said to him "am I in this fund to make money for you or for me?" No response.

    I have no time for them any more and I dont care if I dont make as much money as they tell me they could make; at least I am not paying the high comissions any more. I have enough funds to to see me out and why should I go looking for higher returns just to leave behind for someone else to spend.

    27th Aug 2015
    8:36pm
    So far not ONE postive comment...that says a lot lol!
    MICK
    27th Aug 2015
    8:57pm
    Tells the story.
    Ask anybody done over in the Storm fiasco, the Commonwealth Bank corruption and also any of the other banks also involved. A rotten stinking lot.
    bohanka
    27th Aug 2015
    11:00pm
    I have an excellent financial planner - my wife!

    And she's the only person I'm prepared to trust with our money.
    Anonymous
    30th Aug 2015
    10:52am
    Good choice bohanka, but you have to know the ins and outs too, in case (heaven forbid) your dear lady can't take care of the monies in the future.
    deebee
    28th Aug 2015
    11:00am
    Was wondering how much the forum consider enough to see one out. Have a little less than $300,000 in bank in TD's and other bank accounts. I'm 72 and not on any sort of pension. Thanks.
    deebee
    28th Aug 2015
    11:00am
    Was wondering how much the forum consider enough to see one out. Have a little less than $300,000 in bank in TD's and other bank accounts. I'm 72 and not on any sort of pension. Thanks.
    mangomick
    28th Aug 2015
    3:25pm
    deebee...Have you spoken to Centrelink. I'm just wondering why you aren't on some sort of a pension. A NAB isaver account only pays 2.7% and I would think looking at the canstar ratings you would be lucky to be getting even 3% for a TD so i would have thought regardless of what sort of house you own you would be entitled to some sort of a pension payment because at 3% on your $300k that's only giving you an income of $9000.That would mean you qualify for at least a part pension. At 72 you probably have another good 20 years left in you so I'd be knocking on Centrelinks door and asking the question. No one could say how much is enough to see one out because we are all different and have all different interests and different lifestyles and circumstances. I'm spending all I make now so when i retire I reckon i'll need to have about as much investment earnings coming in as i have salary coming in now. less what I pay in tax as my investment earnings should be tax free.
    deebee
    30th Aug 2015
    8:29am
    Thanks Mangomick. I went to the local Centrelink office in the past and they gave me a card with a 'phone number on same. Have never been able to reach anyone on the number. I had a feeling I should be on some benefit. I'll have to make another visit to Centrelink and demand to see someone. The place has never been the same since Medicare took up residence. Unfortunately, I have a number of chronic health problems and can't see myself lasting more than another 8-10 years. No longevity in my family. Grateful for your help.


    Join YOURLifeChoices, it’s free

    • Receive our daily enewsletter
    • Enter competitions
    • Comment on articles