I want to share with you what a financial planner actually does, because most people seem to either have misconceptions or just don’t know. And they're not to blame for that; it can be confusing. This is because financial planning is a very broad field. Some financial planners are really life insurance brokers and just sell/recommend life insurances. Some just focus on debt management and budgeting advice. Others focus on younger "accumulators" and provide advice to them on how to reduce debt or increase assets. Others, like me, choose to specialise solely on planning for retirement advice. And others are "holistic" and cover everything.
I like to think of financial planning as the process where a financial planner and client get together to, at first, discuss the current financial situation of the client. The financial planner and client then explore what’s important to the client and what their future goals, aspirations and objectives are. The planner then works out a strategy to meet these objectives and prepares a financial plan, officially called a Statement of Advice. The Statement of Advice (Financial Plan) usually always covers retirement planning, eg. Informing a 50 year old of the steps required by him or her to retire at their preferred age with a sufficient retirement income to meet their likely retirement lifestyle.
The actual steps involved may include:
- How much you need in retirement
- Budgeting
- Superannuation salary sacrifice
- Superannuation contribution rules and the limits
- Regular savings and investment plans
- Tax effective structures
- Government co-contribution and/or other government benefits like the WA Seniors Card
- Centrelink aged pension maximisation strategies
- Assessing a transition to retirement
- Direct Shares
- Debt reduction strategies
For retirement planning purposes, whilst the Financial Plan/Statement of Advice will hopefully show a detailed plan of action for the client to get to where they want to be, sometimes the goal is unrealistic and can’t be met. In this case the client is informed that there will likely be a shortfall, but that the shortfall can be limited by working a few more years, or foregoing their annual overseas holiday etc.
I consider the above process to be ‘holistic’ financial planning, meaning that it covers the client’s entire situation rather than just bits of it. Having said that, there are numerous occasions when clients see a planner for just one specific reason. For example, they may want advice on how best to invest an inheritance or other financial windfall, or they may only want to arrange income protection or life insurance. Whilst financial planners can help with these ‘one off’ situations, I think the majority of financial planners would agree that the clients best interests are served if they have a broader and more comprehensive meeting.
Without doubt the vast majority of people will benefit from visiting with a reputable financial planner and having a chat with them. In most cases the initial meeting is at the planner’s cost (no cost to you) and this enables you to meet with a few different financial planners before you decide who to entrust your financial future with. And it really is your financial future; the relationship with your retirement adviser may well last decades. Cornish Wealth Management's website provides much more information on retirement advice in perth (https://perthfinancialplanning.com.au).
ASIC's moneysmart website provides some tips on working with a financial adviser. You can view them here. They give you a list of things to take to the first meeting, but crucially they also instriuct you to "know what your adviser is offering". And the first point is the scope of advice. As discussed above, not all financial advisers are the same; they cover different areas. There is no point in you coming to see me if you are wanting advice on life insurances; it's not something I choose to do anymore. Come and see Cornish Wealth Management for retirement planning advice. Especially if you value "independent" advice.
Surprisingly, whilst the moneysmart article provides a few decent tips to ensure you get the right adviser for you, and don't get taken advantage of, it fails to mention their very own Financial Adviser Register. Which kind of make you wonder why they have it if they don't consider it an important step for consumers. I do, so hereby let you know that part of the due diligence you should do before seeking financial planning advice is to check they actually are a financial planner/adviser. You can do this on the Financial Adviser Register which is located here - https://moneysmart.gov.au/financial-advice/financial-advisers-register .
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