Choose a financial planner
How to choose a financial planner
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A financial planner is someone who works closely with you and gets to know you at depth.
Based on their understanding of who you are, what you need and current legislation, they set realistic financial goals and make plans to help you achieve them. Whether your goals are short or long-term, the financial plan they put together for you will be unique to your situation.
A financial planner can also inspire you to stay focused on achieving your goals. You can think of them as a fitness coach for your finances or even a sounding-board for bigger financial decisions you want to make.
With the help of the right financial planner, you may feel more confident and optimistic about your financial future.
Financial planners should be fully licensed and qualified as financial planning is a specialist profession. They should have extensive industry knowledge and access to research.
Before deciding on a financial planner, you should —
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Check their AFS licence
Make sure your financial planner has an Australian Financial Services (AFS) licence or is an authorised representative. If in doubt, you can double check their qualifications here.
Think about what you want from your financial planner
Financial planners can help with a lot of different things. You need to decide what. Do you want help investing your money for greater returns? Choosing premixed investment options? Getting ready to stop working? Or something else?
Thoroughly read your financial planner’s Financial Services Guide
Get to know your financial planner’s fees and services as well as how they manage things when they don’t go to plan.
Take the time to understand how a planner might charge you
Have a chat with a few different planners to learn how the different ways they charge. Don’t forget to get a rough estimate of their fees. Some charge more than others and may not fit your budget range.
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A financial planner takes the time to understand who you are and what you want to achieve
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Some of the things a financial planner can help you with✓ Taking control of your budget✓ Getting out of debt sooner then later✓ Making the most of an inheritance
✓ Growing and managing your wealth
✓ Saving for your first home✓ Saving for holidays✓ Investing your money in a more tax-effective way✓ Protecting your income with the right kinds of insurance✓ Understanding the long-term benefits (or consequences) of your financial choices✓ Planning the costs of getting married and helping you see the upside of a combined income and savings
✓ Making the most out of your current income and/or growing it
✓ Planning for a family and loss of income during maternity leave✓ Planning finances after a redundancy or during a job change✓ Enhancing superannuation opportunities✓ Providing guidance on securing an Income Stream✓ Determining if you have enough super for the retirement lifestyle you want✓ Taking advantage of any available options to boost super such as Transition to Retirement (TTR)✓ Exploring the Age Pension and other Centrelink benefits for a complete retirement solution✓ Making sure you always have enough money to live comfortably in retirement
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How a financial plan is put together
A financial planner’s process is one that’s taken in steps. Most of the time a financial planner will —-
Develop an understanding of your financial situation and discuss their fees and costs.This is the getting-to-know-you phase. Everything begins with a chat.
Your financial planner will want to understand how you think about money, your approach to spending, saving and investing. They should be keen to learn what level of risk you feel comfortable with when it comes to investing.
They’ll also talk through the fees and costs needed to receive financial advice from them. -
Help you define your financial goalsBased on their understanding of where you’re at financially, your financial planner should help you define your overarching life goals.
Afterwards, they’ll help you define your short, medium and long term financial priorities. -
Identify the scope of advice you needYou and your financial planner will need to agree upon the scope of advice needed. This is dependent on your financial goals, your life-stage and how complicated your financial situation is.
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Provide you with a Statement of Advice (SOA)Your financial planner will present you with a Statement of Advice (SOA). The SOA is the financial plan based on where you’re at financially and where you want to go in the future.
How your finances are structured and what your investment options are will be detailed in the SOA by your financial planner. Your financial planner would have spent significant time comparing a variety of different strategies to determine what will work best for you. They would also have looked at a plethora of financial products before determining which is best for your situation.
Make sure you read it! -
Discuss the SOA with youThis is where you get to ask questions you may have about your plans going forward. You can also tell your financial planner what it is you’d like to prioritise because it may not be possible to do everything at once.
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Help you implement their recommendationsYour financial planner can sort out any paperwork needed to get the ball rolling on new financial strategies or products you want to use.
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At the end of the day, your financial planner’s responsibility is to make helpful recommendations and to give you a clear path forward.
It’s their job to make sure you understand any risks involved and to communicate the strengths or weaknesses in the plan they’ve given you.
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A few more facts about financial planning
Survey-based research conducted in 2014 showed that —✓ Investors who received advice over four to six years accumulated
69% more assets than those individuals who had no advice.
✓ Investors who received advice over: over 15 Years accumulated
290% more assets than other comparable households
Source: The Gamma Factor and the Value of Financial Advice (Aug 2016) Cirano
