We believe almost everyone can gain from professional help. We also understand that using a financial adviser seems like a huge step. Why spend money on a professional when do-it-yourself money management is free? Is the extra value really worth the cost? Anyone who chooses to DIY their finances runs several risks, and we believe that most people – across a variety of personal circumstances – can benefit from a financial health check and tailored advice.
In 2021, it is believed an adviser in Australia adds approximately 5.2% p.a. to a client’s portfolio*.
Steve Fort is a Director and Senior Financial Adviser at Invest Blue who has nearly two decades of experience as a certified financial planner.
He’s found that most people seek financial advice when they encounter a problem they want to address, or they want to do more with their money and aren’t sure how to take the necessary steps. However, Steve believes almost everyone can benefit from sitting down with an adviser and undertaking a thorough financial analysis. Why wait until you encounter an obstacle?
“A financial adviser provides clarity, information, support and guidance to clients to ensure that they can live their best life,” he explains. This means addressing gaps or concerns in their current financial situation; providing a level of expertise so they can approach their future in the most efficient and effective way; and, most importantly, articulating their goals and dreams and establishing a strategy to achieve these objectives.”
Not convinced? Let’s explore some of the reasons you may need expert financial advice, as well as the biggest mistakes you could be making by going at it alone.
Is the juice worth the squeeze?
Financial advice comes at a cost, but the services you receive should pay for themselves before long.
Tangible benefits are the easiest to calculate, so let’s start there. You can take advantage of:
- Faster debt reduction; and
- The ability to retire earlier.
But, according to Steve, there is even more value to be had when you take the intangible benefits into account.
“Clients feels secure, supported, comfortable and guided knowing they have a financial adviser they can trust,” he says. A professional can guide them and their family to a financially secure future, allowing them to live their best possible life and achieve their goals and dreams.”
Financial advice is about more than superannuation and investing, it’s about understanding what your goals and dreams are and how to achieve them.
People often think of Financial Advice as something for the ‘rich’ or to be used when transitioning to retirement. Those 20-30 years prior, however, can make a huge difference – both to the lifestyle you retire with and to the peace of mind and comfort you have during your working years.
For many couples, money is not something that is discussed regularly, if for no reason other than they are time-poor. This can lead to conflicting objectives and perceptions of where they stand. For this reason, a significant benefit of partnering with an adviser during your working years is to provide clarity around your goals and plans. Knowing where you are heading, committing to that together, and tracking on an ongoing basis reduces the fear many of us have of money.
These are some of the advantages of seeking financial advice, but what about the flip side of the coin? What mistakes are you likely to make if you DIY your financial planning for the future?
Common pitfalls of going it alone
No matter how savvy you are on money matters, chances are you’ll have some blind spots when it comes to your personal finances. Everyone’s financial situation is different, as are their goals, opportunities and the strategies available to them.
- Relying on friends and family
Whether it’s neighbours, relatives or buddies, seeking investment help and advice from the people you know isn’t always the best move. Yet 44 per cent of us continue to take this approach1.
Friends and family have the best intentions, but loved ones are unlikely to know the ins and outs of your financial situation. You also may only hear about their investment wins – not their losses – which can skew their recommendations.
- Insufficient retirement planning
Your accumulated super is likely to be one of your biggest assets. Yet, many people fail to put enough thought into how their money is invested or the tax savings that are available.
“Superannuation is not a product, it is a tax structure and environment that should be fully utilised,” Steve advises. “This is probably the biggest mistake people make.”
People can access financial advice online or, as mentioned, through friends and family. But while these strategies can seem sound in theory, they may not be suitable for your unique objectives.
“Everyone’s financial situation is different, as are their goals, opportunities, and the strategies available to them,” Steve adds.
Acting on financial recommendations before calculating the most appropriate structure to implement the advice is another pitfall for DIY money managers.
For example, buying an investment property is often a sound strategy. However, it’s crucial to consider the short- and long-term tax implications of each ownership structure first. Would individual, joint, family trust or SMSF ownership be the best option for you?
- Not giving it the right amount of time
During our working years, we spend the vast majority of our time growing our careers and nurturing our families. Personal finance often takes a back seat. No matter how advanced your abilities in the financial space, there is a good chance you are under-doing the time needed to look after things well.
By adding an Adviser to your team, you are spreading the workload and ensuring that someone who does spend their work-life focused on the things that will make a difference to your finances is looking out for you.
Yep, the mushy stuff. Our own advisers use each other to support their personal plans for good reason. When it comes to your own hard-earned dollars and future; it is near on impossible to keep things like fear, guilt, excitement, or sentimentality out of the picture.
Having an adviser on your team means you have an objective third party to provide insight into investment options. Of course, you fully control your final choices, but at least your decisions will be better informed.
79% of Australians recognise that advisers have expertise in financial matters.
Are you ready to take the next step?
Effective financial planning can help you build the perfect future for you and your family. Whether it’s superannuation insights, investment help and advice, estate planning or other areas of financial advice, we believe guidance from a professional more than pays for itself over the long term.
Cited source: https://www.fpsb.org/news/global-survey-financial-planning-standards-board-finds-consumers-lack-strong-confidence-achieving-financial-goals-2/
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.