Why it's worth having a financial planner

A skilled adviser can help you kick your financial goals, but very few of us have them on our team. We find out what's putting people off and why we need to overcome our misconceptions ASAP.

Has there ever been anything more adult than an appointment to see a financial planner? Probably not. These are, after all, the people who help us prepare for some of life's biggest changes, like buying our first home or getting ready for retirement.

Yet despite the fact most financial planners have a huge wealth of knowledge that can help us kick our life goals, research shows that one in three people don't seek out any external advice when it comes to making decisions about money - and there are a multitude of reasons why.

To debunk popular myths around financial planning and shed light on why it's worth having a financial adviser on your team, we caught up with Cara Brett from Bounce Financial.

"Where accountants tend to handle specific elements of your finances, like tax returns, financial planners take a more holistic approach," explains Cara. "So most generalist financial planners will support you with things like cash flow management, superannuation, personal insurances and investment strategies.

"While we don't handle things like tax, we work with accountants to make sure this element of your finances is running smoothly. And although we wouldn't secure a home loan for a client, we would work with mortgage brokers or banks to help it get across the line for them.

"Basically, we act as an overall financial goals coach to make sure every aspect of our clients' finances is taken care of, so they can get to where they want to be."

In Cara's experience as a specialist in Gen X and Gen Y finances, that's not the case at all.

"It's worth consulting a financial planner whenever you experience a major life change, whether that's scoring your first-job, getting a substantial pay rise, starting your own business, buying your first-home, starting a family, getting married, coming into any inheritance money - the list is endless," she says.

"Of course, retirement falls under the umbrella of major life change too. But there are plenty of milestones before then that you might want to get some financial advice on."

"This is a common thought process," explains Cara. "But what people sometimes don't realise is that there are certain things they can do early on in life that will have huge benefits for them later down the line.

"Life or health insurance is a great example, because, chances are, it's going to be much easier to secure a policy and a decent premium when you're in your twenties than it will be when your health has deteriorated 30 years on.

"Superannuation is also a good one. The fees are likely to have little minimal impact on your current financial situation, but could result in a much greater amount of wealth by the time you're ready to retire."

"It's a financial planner's job to figure out a strategy for their clients to be able to start saving and building their assets," says Cara. "So there's really no minimum amount you have to be sitting on before you can consult one."

Financial planners are money experts, so surely they'll take plenty off you, right? Well, not necessarily.

"Every adviser is different, but it's quite common to be charged just a one-off upfront fee for a session," says Cara. "What'll usually happen is they'll give you enough direction that you can then go away and act on the advice by yourself. Or you can obviously choose to continue engaging with that adviser on a more regular basis. In those instances, you can probably expect to pay a monthly fee, which could be a flat rate or percentage-based depending on what you currently have in the bank.

"Lock-in contracts with financial planners are also really rare and you can sometimes even pay for financial advice through your super, so there are plenty of ways you can keep the impact on your current financial situation to a minimum."

A good place to start is your own network, suggests Cara.

"Reach out to people you trust to see who they've used, but also make sure you do your research to make sure they're actually legally allowed to give advice. The ASIC website has a useful search function that lets you to check whether financial advisers are registered and licensed. And bear in mind that as a bare minimum a financial planner needs to have a Diploma of Financial Planning and an Australian Financial Services Licence (AFSL).

"Adviser Ratings is also a useful resource as it shows client reviews, relevant qualifications and lets you filter by your location, age and any specialist support you need."

"You should never feel pressured or interrogated by your financial adviser, so it's worth taking the time to find one that you feel really comfortable with" says Cara.

"Lots of financial advisers offer a free initial meeting, which is your opportunity to sit down with them, ask as many questions as you like and really suss out whether their advice is likely to have your best interests in mind."

No matter what life stage you're at, there are some simple things you can do to start getting your finances in order, without it feeling too overwhelming.

"Don't try to run before you can walk," advises Cara. "Start with the basics, like making sure you know where any existing assets are at. So if you've ever changed jobs or address, it's worth checking on the MyGov website to check whether you have multiple super funds in your name that you might have lost track of."

"As a general rule, you should be meeting with your financial adviser at least once a year to review your goals and progress," recommends Cara. "But you should also be touching base whenever anything significant happens that might affect your personal situation from a financial perspective, so you can adjust your plan accordingly."

This article is brought to you by AIA Australia, a leading life insurer, which offers a comprehensive range of products that protect the financial health and welfare of more than three million Australians.

Disclaimer:
The information in this article is general information only and is not intended as financial, medical, health, nutritional, tax or other advice. It does not take into account any individual’s personal situation or needs. You should consider obtaining professional advice from a financial adviser and/or tax specialist, or medical or health practitioner, in relation to your own circumstances and before acting on this information.