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Are financial planners worth the money?

When it comes to our financial situation, most of us are fumbling around in the dark. According to the Australian Securities and Investment Commission, more than one-third of Australians do not feel secure when it comes to handling their money, and a comparable proportion considers finances to be stressful and burdensome (ASIC).

According to the same survey, almost half of all Australians do not have a financial plan in place that is valid for the next five years. Given the number of people who are impacted by this issue, can you imagine what life would be like if there was no financial planning?

Consider an individual who has a number of goals: they want to live a life that is comfortable and balanced, they want to plan for the future, they want to care for their family, and they want to donate to causes that are important to them. What if they don't collaborate with a professional financial planner? What would be different?

How could they possibly know what's possible in terms of their finances if they don't get professional advice? In the event that anything unexpected took place in the future, how well prepared would they be? Would they be aware of what they could do and plan for within their financial means? Would their family be taken care of in the same manner? What kind of feelings do people have towards money?

Working with a financial planner can provide you with a more accurate picture of the future and assist you in making decisions that are both intelligent and self-assured; however, this service does not come without a cost.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing

What exactly is the role of a financial planner?

Financial planners are specialists in the sector who assist individuals as well as businesses in planning for their own financial futures. These planners are able to assist you in the management of an investment portfolio, the purchase of stock and other investments, the provision of investment advice, the establishment of a plan to achieve a financial objective, and the planning of a retirement strategy.

The primary motivation for consumers seeking the assistance of financial planners is the desire to obtain a knowledgeable opinion and direction regarding their financial planning. Financial planners are not required to acquire any specific certificates; nevertheless, the majority of financial planners do, and they also have extensive industry experience and training.

The key distinctions between a financial planner and an advisor for financial matters

There are important distinctions to be made between a financial planner and a financial advisor, despite the fact that many people use the terms interchangeably. The word "financial advisor" is a generic, all-encompassing term that refers to anyone who provides assistance with the management of monetary matters. This may include financial investments, significant purchases, real estate transactions, life insurance, or even tax planning. Working with the general public requires a specialized license, which financial advisors must have in order to practice (Series 65).

Individuals and companies alike can benefit from the assistance of financial planners when it comes to planning for their monetary future. In contrast to financial advisers, financial planners are not legally needed to possess any specialized credentials in order to practice their profession. Having said that, a good number of them do possess licenses, and various qualifications, and have completed specialized training in order to provide superior service to their customers. In addition, there are particular areas of advising in which they are required to adhere to certain legal criteria.

What is a financial planner, and who are they for?

A skilled professional known as a financial planner is someone who can assist you in establishing your short-, medium-, and long-term financial goals and provide you with expert guidance to help you accomplish those goals. There is a widespread misunderstanding that financial planners are primarily interested in working with customers who have significant amounts of money. This is not true in all situations. There is no requirement that one be affluent in order to use the services of a financial planner, and those who do so can come from a wide variety of walks of life and be in need of their assistance. They have an in-depth understanding of all aspects of finance, from investing and superannuation to insurance and debt, among other areas of expertise.

Everyone has distinct monetary requirements, which are determined by the stage of life they are in and the specifics of their situation. In many situations, the general guidance that you may acquire on your own is insufficient, and this is where the assistance of a financial planner comes in handy. They will analyze your circumstances, gain knowledge of your one-of-a-kind financial requirements, and devise a strategy that is customized to meet both your demands and your objectives.

When you work with a financial advisor, what can you expect to happen?

Bring the information with you to the first meeting you attend, and have some concept of the goals you want to accomplish before you arrive. You'll also need to be open and honest with your adviser; if you provide information that is either dishonest or incomplete, you might get counsel that isn't appropriate for your circumstances (if you don't have all the facts, don't worry; just be straightforward about the fact that you don't).

Your advisor ought to inquire as to the kinds of monetary objectives you have in mind for the future; for instance, do you want to clear off your mortgage, put money away for your golden years, or make certain that you and your loved ones are covered in the event of a severe injury or illness? In addition to this, they will require a detailed summary of your income, expenses, assets, and obligations (including information regarding any outstanding student loans). If you are interested in making any kind of investment, they will need to have a conversation with you about the level of risk you are willing to accept.

Should you hire a financial planner

At any point in time, you are free to seek the services of a financial planner. However, there are some scenarios in which it may be more prudent to seek the assistance of a professional in the field of financial planning.

You're at, or close to, retirement age

When you are getting close to retirement, you may find that you have some of the most important financial questions. Do I have sufficient funds in my account? What do my choices consist of? How can I make my money go further? Financial planners have specialized training to assist individuals in preparing for and successfully navigating the myriad of obstacles that come with reaching retirement age.

You earned a significant rise

It is possible that the time has come for you to formulate a strategy when there is an unexpected increase in the amount of money flowing into your possession. Even while you could spend that money to improve your quality of life in the here and now, you might want to give some thought to investing it so that it helps you build wealth and improves your long-term financial position instead. A financial planner may assist you in determining where to put your money, what choices you have available to you, and what might be the most effective strategy to build your overall wealth.

You were the beneficiary of an inheritance.

When you are the recipient of an inheritance, seeking the assistance of a financial professional is one of the most crucial things you can do. You will most likely have questions about where to invest the money, how to honour the ultimate financial desires of your family member who has died away, and how the newly acquired wealth will alter your life going ahead. The answers to all of these queries can be provided by financial planners.

You are in the process of getting a divorce.

Divorces can have a significant negative impact on your mental health, but they can also have a significant negative impact on your financial support if the couple previously shared financial responsibilities. Who is going to get what? How can I safeguard myself from harm? Where should I reinvest my money and resources? The insightful counsel of an experienced financial professional can put an end to all of these uncertainties and worries once and for all.

You have been through a significant turning point in your life.

It is possible that you will need the assistance of a financial planner for any other significant life event that takes place. You should have a plan in place before making any major life changes, such as switching careers, experiencing a significant reduction in workforce size, discovering a new source of income, becoming a parent, selling a business, or any other life event. A financial planner can guide you through all of your available choices and assist you in arriving at the most intelligent conclusion possible.

You are now prepared to take charge of your personal financial condition.

You can decide to take charge of your current and future financial position without waiting for a major life event to occur in order to motivate yourself to do so. Contact a financial planner if you feel you are ready to make a change in your current plan. In addition, if you already have a plan that you wish to put through its paces in the form of a stress test, a qualified financial planner may assist you in locating any potential leaks in your plan and providing solutions to fix them.

happy retired couple sitting at desk with laptop

You don't need a financial planner if

You live paycheck to paycheck

Even if you still require a financial plan, it's unlikely that you'll require the assistance of a financial planner. Instead, you need to focus on straightforward methods such as making a budget, conserving money, and decreasing costs in order to make steady progress. When you have gained some ground with the fundamentals, you can start thinking about getting some assistance so that you can move on to the next phase.

You're deep in debt

The primary goal of financial planners is to assist their clients in amassing greater money. A person who is already in debt is not in the best position to pay for the services of a financial advisor because of this. You should speak with a credit counsellor or a financial specialist who specializes in helping people get out from under their financial obligations instead. When you have paid off all of your debt, you can next shift your attention to expanding in preparation for the future.

You are quite competent in what you are doing.

People who require assistance in making decisions regarding their finances can benefit from using a financial planner. If you are already considered an authority in your industry, you may not feel the need to pay for the assistance of a professional who possesses the same level of knowledge as you do. The only circumstances in which this rule could be broken are those in which you are pressed for time, desire a second opinion, or wish to put an established strategy through its paces.

Why should I consider using the services of a financial planner?

The process of making difficult financial decisions can be made easier with the assistance of financial advisors. A good financial planner who has received adequate training will be able to simplify complicated scenarios in a way that is easier for you to understand. In addition, financial planners may lay out all of your available options and assist you in making the choice that will have the least negative impact on your finances moving ahead.

Is it possible for a financial planner to ensure that I will make a return from my investments?

There is a possibility that professional financial planners will be able to assist clients in developing investment portfolios that carry very little to no risk. However, it is possible that they will advise you to pursue an investment strategy that does include some degree of danger if your circumstances warrant it. In these kinds of circumstances, financial planners won't be able to ensure a profit because they won't be able to exert any influence over the ebb and flow of the market.

Are there differences between the many financial planners?

Yes. There is a wide variety of financial planners available, and it is essential that you take the time to search around for the planner who caters to your need the most effective. Experience, certificates, licenses, time available, account minimums, prices, and fees are some of the most significant ways in which different financial planners can be distinguished from one another.

A lot of individuals ask whether or not it is worthwhile to work with a financial advisor — how much on average they charge, whether or not the fee is fair, whether or not they should work with investment advisors or financial planners, and so on. If you are currently thinking to yourself, "I need a financial advisor," then it is highly recommended that you seek the services of one.

There are certainly some unscrupulous ones out there, who are either incompetent or simply not looking out for your best interests. However, hiring a competent financial counsellor can work wonders for your overall financial situation.

Why it's important to work with a financial advisor

Some people don't need much financial advice. You, too, might not...

  • If you have been dutifully putting money away for your retirement and have been investing it wisely.
  • If you have put together a solid plan for your retirement that will provide you with an adequate income throughout your golden years, congratulations!
  • If you have the correct quantity of insurance to protect your home, your automobile, your life, your income, and anything else that needs to be protected, then you are in good shape.
  • If you have your debt under control.
  • If you have an estate plan that will keep your beneficiaries' tax burdens and administrative burdens to a minimum.

However, only a small percentage of us have all of these financial ducks (and even some other ducks) in a row.

The Retirement Confidence Survey that was conducted in 2017 found that approximately 24 percent of workers reported having less than $1,000 saved for retirement, and an astounding 55 percent reported having less than $50,000 saved. Only twenty percent had saved at least two hundred and fifty thousand dollars.

It is safe to argue that having saved $250,000 is incomparably superior to having, for example, merely $50,000 in one's savings account. However, despite what you would believe, even a sum of $250,000 will not get you very far. Take, for instance, the well-known "4 percent rule," which advises that, after you reach retirement age, you should withdraw approximately 4 percent of your savings each year (adjusting for inflation over time). Even if you had a nest egg worth $250,000, that would only provide you with $10,000 in annual income. If you are planning to rely on Social Security to make up the difference in your required income after retirement, you should be aware that the average income from Social Security is approximately $16,000 per year.

When should you get a financial advisor?

A reliable financial counsellor is able to take a holistic view of your situation; they can evaluate all of your financial requirements and difficulties, and they can provide assistance in meeting your objectives. A financial advisor may help you plan for retirement, advise you on investment ideas, advise you on how to deal with tax concerns, and assist you with employee stock options, among other things. This is something you should keep in mind throughout your life, but especially when you are drawing close to important life events such as paying for college, purchasing a house, getting married, having a baby, adopting a child, retiring, or receiving assets.

When you decide to switch employment, you need to give some thought to what will happen to your retirement assets. Considerable thought ought to be given by each and every one of us to the question of whether or not we are adequately covered by long-term care or disability insurance. A financial advisor can help you decide whether leasing or buying your next vehicle is the better option for you, whether you should refinance your home, how to avoid paying inheritance taxes, how to maximize your ability to care for aging parents, and many other important life decisions.

Are they qualified and licensed?

Inquire about their credentials, such as whether or not they hold a degree from an accredited college as well as a postgraduate certification, such as the Certified Financial Planner designation. If you want to pay the least amount of tax possible, one option you have to consider is working with a financial planner that has experience in accounting as well. Look them up on the website of the Australian Securities and Investment Commission (ASIC) to determine if they have a license to operate in the industry. I am aware that this may appear to be self-evident; yet, you may be startled by the number of horror stories you hear that involve unscrupulous advisors who aren't even authorized to provide guidance. Carry out your audits!

How much experience do they have?

Because it takes time to understand strategies, structures, tax, and financial markets, your adviser will be able to counsel you more effectively if they have more experience. Inquire with them about their experience working in the field.

What areas do they have experience in?

Even though they offer a vast list of services, it does not necessarily mean that they are seasoned professionals in each of those fields. Inquire with them about the specifics of their emphasis and preferences for different client scenarios.

How much will it cost you?

Financial advisers are obligated by law to disclose any money they are likely to earn for their advice. This revenue can come from you in the form of fees, or it can come from third parties in the form of commissions in exchange for introducing particular investments or products. Instead of paying a percentage of the total amount of money you have available to invest, you might want to think about working with a financial adviser who uses an agreed-upon fixed-fee model. In this model, you pay a predetermined amount for a predetermined number of services that your adviser will provide for you.

Expect to pay for their professional skills just like you would for any other type of expert, as the greatest advisors are not likely to be the least expensive options.

mother with baby stressed by finances

Do they operate on their own?

A significant number of consultants are either indirectly or directly hired by huge companies that manufacture and sell their own lines of goods. Because of this, the selection of products that they can provide you can be reduced. Ask them questions about the things they are allowed to promote and make sure you understand the constraints of the things they can't recommend.

Because selecting an adviser is a significant choice, you should take your time, make sure you are confident in their credentials and experience, and remember that this decision will probably have an effect on your upcoming retirement.

Why not boost the financial savvy of others around you? Pay it forward by sharing this advice with your family, friends, and children. It's a win-win situation.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing

Why is it worthwhile to hire a financial planner?

Financial planners understand how to achieve financial goals

A financial planner may help you develop a strategy to achieve your objectives, regardless of whether you are putting money aside for a down payment on a house, working to reduce your debt, preparing for retirement, currently have investments, or are just considering making financial investments. You can re-engage them in the future to assess your plan if circumstances change and they will recommend efficient and effective tactics for reaching your goals in the most time-effective manner feasible. People seek the guidance of financial planners for a variety of issues, some of the most common of which are superannuation, budgeting, tax management, asset management, and estate planning.

Financial planners have in-depth knowledge of financial products

Financial planners are experts in all aspects of the financial industry, including goods, tools, and strategies, and they will be able to advise you on the optimal combination of these aspects to help you reach your monetary goals. These may include specific types of insurance that are tailored to your situation, advice on how to most effectively manage your savings and borrowings, assistance with budgeting and general money management, as well as individualized techniques for investing.

Financial planners can save you a lot of time and energy

Even though it is feasible for you to handle your personal finances on your own, hiring a professional to do so can save you a significant amount of time, effort, and energy. This is especially true if managing your finances on your own causes you to feel anxious or confused.

A financial planner may perform the legwork on your behalf so that you don't have to worry about staying abreast of changes in the economy and legislation that could have an effect on your financial condition. If you are using the services of a financial planner to direct your approach to investments, then it is possible that they will also be able to manage your portfolio.

In the long run, you may make your money back

According to a study that was conducted in 2016 by the United States-based subsidiary of Vanguard Investments, even while it does cost money to utilize the services of a financial planner in most circumstances, you may recover your upfront costs in the long run. This is due to the fact that proper financial planning can lead to more effective management of one's money. This can include minimizing one's tax liability, reducing one's interest expenses, paying off one's mortgage more quickly, and implementing various other strategies that save money and look for ways to maximize it.

According to the findings of a study conducted by Vanguard Investments, financial planners have the potential to add a three percent increase in net returns for their clients by utilizing a variety of strategies. These strategies include locating lower-cost investment tools, managing asset allocation, assisting clients in developing and adhering to financial plans, and providing other assistance.

Employing a financial planner can assist you through the more difficult (and sometimes simpler) financial circumstances that may arise in your life. Be sure to take your time in finding the most suitable financial planner for your needs if and when you reach the conclusion that you need the assistance of an expert. Look for someone who has experience, the appropriate certifications, and a knowledge foundation that can handle the circumstances you are in.

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