Why You Need (and Want) a Financial Adviser


Why I Need (and Want) a Financial Adviser

You’ve probably wondered what a financial adviser does. Or perhaps, why you might need one. In this post, we thought it apt to share what you should expect from your financial adviser.

In Australia, a financial adviser must be licensed by ASIC, either directly or as an authorized representative of an organization licensed by ASIC, to provide advice on matters of a financial nature. It is now legislated that the title “financial adviser” can only be carried by individuals with the appropriate credentials, experience and continuing education.

So what value can a financial adviser add to your life? The answer may surprise you – it’s not only about or always about investments, superannuation or SMSFs! Here are some of the more important things you should expect from your financial adviser:

Clarify and prioritise your goals

Goal setting may seem like a luxury if life is just a cycle of bills, bills and more financial obligations. Between management gurus like Drucker and Doran and evidence from research conducted by psychology professor, Dr Gail Matthews, the benefits of goal setting are sufficiently well documented to be taken seriously. We certainly can attest to that from the hundreds of clients we have worked with over the years. Setting SMART goals is the way to go if you are serious about achieving your goals. A good financial adviser helps facilitate that conversation about goals, clarifying what is most important to you and your priorities. Yes, these priorities can and do change over time and a good financial adviser also works with you to tweak your financial plan so this stays in alignment with your goals and objectives over time.

Optimise your finances

Ever faced financial decisions that make your head spin and worried that you might do the wrong thing - for example, leasing vs. buying a car, renting vs. buying a home? Ever made a financial decision that seemed like a great idea only to be slapped with huge fees for administration or a tax bill, or that ends up costing you more than you make? Here’s where a good financial adviser helps. A holistic adviser takes the time to understand your current situation, needs and objectives, discussing different strategies and options available to you. Alternative options are costed, explained in plain English and documented, with ample time for you to consider the recommendations and ask any questions before making your decision. Your adviser’s role is to ensure that recommended actions are in your best interest taking into account your current situation, needs and objectives.

Know what support you are entitled to

Your financial adviser should also be able to advise you on what financial assistance you may be able to access, such as Centrelink. Choosing a financial adviser well-versed with available government support means, where required, you receive advice that will seamlessly blend private savings and government pension to meet your needs in retirement.

Feel more in control of your finances and your life

Knowing where you are headed (clarity of goals), regularly reviewing your progress and addressing the barriers to you achieving your objectives, increases your sense of control over your finances and often as a result, your life. A good adviser provides a framework for regular review, addressing any change in priorities or life events that may trigger changes to your financial plan. More importantly, a good adviser becomes that panic button, someone you can count on as a sounding board when the unexpected happens in life and there are financial consequences, such as getting that dreaded call to say that your job has been made redundant.

Avoid expensive mistakes

As long time experts in this industry, we have seen it all. The saddest are clients who have come to us with their retirement savings up in smoke because they listened to a mate who told them to invest it in some tax scheme that turned out dodgy, or they put all their money in one asset type because that’s all they know. We have often seen this with property or shares. A good adviser will steer you in keeping with good financial planning principles like goal setting, risk profiling, diversification and reviewing, ensuring your investments match your objectives, your appetite for risk as well as your ability to weather volatility.

Protect your loved ones

In addition to helping you reach your goals and objectives, a good adviser will also put a plan in place to make sure your goals and objectives are not compromised should life throw you a curve ball that means your family loses its income source, whether for the short or long term. Your adviser plays an important role in facilitating that tough conversation – What happens if you can no longer do your day job? Who will care for your loved ones? Who will care for you? – and recommends strategies to make sure you and your family are covered no matter what.

Keep you on track

One last thing. It’s easy to forget that while you trade holiday stories and/or life plans with your adviser, they are busily making sure you’re still on track to achieve the goals and objectives that are important to you. Life gets busy and regular check ins with your adviser make sure that tweaks can be made to your financial plan as required.

As you may expect, not all financial advisers are created equal. Depending on experience and licensing, a financial adviser may be limited to only providing advice specific to certain areas of finance (e.g. risk) or, at the other end of the spectrum, a full range of financial advice. Unless you are clear about the scope of your enquiry when choosing a financial adviser to engage, choose a holistic financial adviser – i.e. one who can have a full appreciation of your needs, is licensed to deal with the full range of solutions and can recommend the solutions that best meet your needs.

In our next post, we will share some tips on how to spot a good financial adviser.

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