Should I Use a Financial Advisor?

Managing your finances can be a daunting task, especially when it comes to investing your hard-earned money.

With so many options and the constantly changing market, getting lost in the sea of information is easy.

This is where a financial advisor comes into play. But is it really necessary to hire one?

In short, the answer is yes. A financial advisor can provide valuable insights and expertise in managing your finances, helping you make informed decisions that align with your financial goals.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing team@klearpicture.com.au.

They can assist in creating a personalised investment plan, monitor and adjust it according to market fluctuations, and provide ongoing support and advice. In fact, research suggests that those who use financial advisors have better investment outcomes than those who don't.

But with so many financial advisors available, how do you choose the right one? In this article, we'll explore the benefits of hiring a financial advisor in Australia, factors to consider when selecting one, and common misconceptions about financial advisors.

So, whether you're just starting your investment journey or looking to enhance your current strategy, let's dive into the world of financial advising in Australia.

What Is a Financial Advisor?

Investments, an assessment of what you already have, approaches put in place, a client's level of risk tolerance, and a timeline are the primary focus areas for financial advisors.

Often, the objective is to amass riches through investing and making preparations for the future. They are able to either make detailed investments on your behalf or offer recommendations on how you should approach the market.

A financial advisor is someone who keeps close tabs on the investments and portfolios of their customers and watches out for their customer's best interests regarding their retirement plans, emergency savings, and other financial concerns.

However, the advisor employs a more comprehensive and long-term method for customers' wealth by continuing to invest their savings in good investment vehicles to meet customers' requirements.

Although the advisor might not offer concrete strategies for monthly cash spend and savings, the advisor does employ a comprehensive approach to customers' wealth.

Financial advisors, much like financial planners, are not required to hold any particular licence or accreditation in order to work.

Nonetheless, due to the fact that their primary business is the sale of investment goods and advice, they are required to comply with state and federal regulations that govern the securities industry.

They can also obtain credentials through the Financial Planning Association of Australia, a trade group for fee-only financial advisors recognised nationally.

Registered Financial Advisers are required to meet requirements that are significantly higher than the minimum, act as fiduciaries for their customers, never accept payment based on commission, continue their education, and take a comprehensive approach when counselling their customers.

You will be in the greatest possible position to achieve your financial goals if you are able to locate a financial counsellor who is also skilled in financial planning. The two services frequently go hand in hand with one another; nonetheless, many individuals specialise only in planning or investing in counselling.

If you are primarily interested in expanding your portfolio or saving money for retirement, it is likely in your best interest to speak with a financial counsellor. That is entirely dependent on the requirements that you personally have. On the other hand, your search results can turn up a collection of relevant materials in a single location.

Most of the time, financial planners and advisors either work for a company that also provides financial planning services or work independently as both planners and advisors.

If they do not work for a company that also provides financial preparation and advisory services, they typically do one or the other.

This is a great combo that may provide a mix of strategic help and execution throughout the entirety of your financial journey.

What to Look for in a Financial Adviser

There are a number of aspects to take into consideration before deciding on a financial adviser in Australia. The following constitute a few of the things that one should look out for:

1. Qualifications and Licenses

It is essential to select a financial adviser who is both qualified and licenced to provide advice in the financial sector. In order to practise as a financial adviser in Australia, one needs to possess a licence known as an Australian Financial Services (AFS) licence.

This licence is granted by the Australian Securities and Investments Commission (ASIC). Searching the Financial Advisers Registry maintained by ASIC is one way to determine whether or not a financial adviser holds a valid licence.

2. Experience and Expertise

You should look for a financial adviser with experience in the areas where you require assistance while selecting.

For instance, if you are considering your options for retirement, you should look for a financial advisor that specialises in this area of planning. At your initial appointment, you have the opportunity to ask about their experience and qualifications.

3. Fees and Charges

Before you commit to working with a financial adviser, you must clearly understand the fees you will be expected to pay because different financial advisers charge varying rates for their services.

Some financial advisors will charge you a predetermined fee, while others may charge you a percentage of the assets they handle on your behalf. Be sure that you have a clear understanding of the fees that will be charged to you as well as the method by which they will be assessed.

4. Client Reviews and Testimonials

Before selecting a financial adviser, it is smart to seek reviews and testimonials from previous customers. You can either search for reviews online or request recommendations from the advisor. This will provide you with insight into the adviser's previous work as well as how they interact with their customers.

5. Personal Connection

Last but not least, it is essential to select a financial consultant with whom you can collaborate in an easygoing manner.

Because you will be exchanging personal information and talking about your financial goals, it is essential that you choose someone you can easily communicate with and with who you have complete faith in.

Where to Find a Financial Adviser

You should ask where you can find a good financial adviser now that you know what qualities you should seek in one. The following are some of the locations where you could look:

1. Referrals from Friends and Family

Asking for recommendations from people you know, such as friends and family, is one of the most effective ways to discover a financial consultant.

They may have previous experience with an advisor that they are able to recommend to you, and by speaking with them, you can get a sense of what it is like to work with that particular advisor.

2. Professional Associations

You can obtain a list of certified financial advisers in your region by contacting professional groups. Some examples of such associations include the Financial Planning Association of Australia (FPA) and the Association of Financial Advisers (AFA).

3. Online Directories

There are a number of internet directories in Australia that have listings for financial advisers. You are able to search for consultants in these directories according to a variety of criteria, including location, area of expertise, and more.

Questions to Ask a Financial Adviser

1. What Are the Adviser’s Qualifications and Experience?

It is of the utmost importance to enquire about your financial adviser's credentials and level of expertise in the field. In order to provide financial advice in Australia, financial advisers are required by ASIC to have achieved a certain degree of education and to have relevant work experience.

It is possible that some financial advisers have extra credentials or experience in specialised areas, such as self-managed superannuation funds (SMSFs), which can be useful in offering advice that is tailored to meet your specific requirements.

2. What Is the Adviser’s Approach to Investing?

Investing strategies might vary widely based on the financial adviser and the requirements of the customer.

While some financial advisors may emphasise growth-oriented investments, others may emphasise taking a more cautious approach.

Asking your financial adviser about their investment strategy and how it relates to your long-term financial objectives is absolutely necessary.

3. What Fees and Charges Will Be Incurred?

It is crucial to thoroughly understand the fees and costs involved while working with a financial adviser because they charge for their services. Request that your advisor offer a detailed summary of their fees and charges, including any ongoing fees and the method by which they will be charged.

4. How Is the Adviser Remunerated?

Remuneration for financial advisers can be fees, commissions, or even a mix of the two. Fees and commissions are two of the most common options. It is of the utmost importance to have an understanding of how your consultant is compensated and whether or not any potential conflicts of interest could impact the advice given.

5. What Are the Risks Associated With the Investment?

Investing in anything always involves taking on some degree of risk.

You must understand the risks connected with the investment and how those risks correspond with your risk tolerance. Ask your financial advisor to describe the potential risks involved with the investment and how those risks will be managed.

6. What Is the Adviser’s Communication Plan?

Communication is vital in any interaction between a customer and an advisor. Inquire about the communication plan that your advisor has in place, including the frequency with which they will communicate with you and the type of communication they prefer.

What You Should Do If Someone Has Given You Poor Financial Advice

1. What Legal Alternatives Are Open to Me if I Got Poor Financial Advice?

If you believe you have been given poor financial advice, the first step you should take is to make an official complaint with your financial adviser and the institution they work for.

You can appeal to the courts or a complaints scheme for your industry, like the Australian Financial Complaints Authority, if their reply does not meet your expectations.

Both going to AFCA and appearing in court have their positive and negative aspects, and there are essential time restrictions for settling disputes.

1. Australian Financial Complaints Authority

Advantages

• AFCA does not impose any fees on its members.
• If your case is unsuccessful, you won't be responsible for covering the legal fees incurred by your financial advisor.

Disadvantages

• It may take more time to settle disagreements (currently 18 months to two years).
• Settlements are less probable.
• Indirect losses do not result in any form of compensation.
• The total amount of compensation that can be awarded is capped at $309,000.

2. Court

Advantages

• The amount of compensation that can be awarded is not capped.
• It is typically more expedient than FOS.
• Settlements are widespread.
• Financial advisors might be compelled to submit essential documents.
• The process of discovery is required.
• There is the possibility of receiving compensation for lost opportunities.

Disadvantages

• If you lose, it will cost you a lot of money.
• There is the possibility of unfavourable cost orders.

2. How Do I Determine Whether or Not I Am Eligible to Get Compensation?

Suppose you have suffered a loss of money or other financial hardship as a direct result of receiving poor financial advice, like the following examples. In that case, you might well be eligible for compensation:

• proposing an unsafe course of action that would not have been suitable for someone in your position.

• neglecting to analyse your situation, requirements, and goals accurately.

• failure to conduct a risk assessment of your tolerance

• failing to provide you with an adequate warning regarding the potential risks involved with the investments and investment plan

• failing to supervise investments and failing to adapt appropriately to changing economic conditions

• neglecting to provide an explanation of the interest that must be paid on loans taken out to make investments

• failing to mix investments and avoid concentrations of risk by investing in a variety of industries and sectors

• neglecting to promote assets that would have resulted in significant commissions for the adviser when other investments would have been more suitable

• "churning" refers to the process that occurs when an excessive number of trades are executed, which results in high costs and commissions.

• neglecting to carry out a risk assessment to determine how you are likely to be impacted when market prices decline

• failure to deliver necessary documents and information, such as a Financial Services Guide, a Product Disclosure Statement, and Statements of Advice, and failing to disclose important information.

• encouraging you to take out debts that were beyond your financial means.

• continuing with the investment despite the fact that the advice and hazards have not been completely disclosed and are not fully appreciated

• advising on a course of action in the event that you do not have a stable source of income or adequate resources or cash flow to cover the cost of making investment loan repayments (without relying on income from the asset that is invested)

• a failure to implement the strategy in a suitable manner

• neglecting to conduct regular reviews and make necessary adjustments to the strategy.

3. Why Should I Have Legal Representation?

Getting poor advice about one's finances might have extremely negative repercussions.

Battling a financial advisory organisation and its insurer on your own is challenging, time-consuming, and tiresome, and it entails a significant amount of fine print and red tape.

Time constraints are attached to many types of financial advice dispute claims.

The attorneys are very knowledgeable in the field of dispute law pertaining to financial advice. We will simplify this procedure by offering basic legal advice, beginning with determining whether you have a legal case and figuring out the most appropriate path for you to take from a legal standpoint.

Bottom Line

In conclusion, proper financial planning is a crucial component of achieving success in the management of one's own resources.

Working with a financial advisor can give you access to expert advice and direction, both of which can assist you in reaching your financial objectives.

If you live in Australia and are debating whether or not you should seek the assistance of a financial advisor, the decision ultimately rests with you.

Nonetheless, it is essential to remember the many advantages of working with a financial advisor.

They are able to assist you in developing a personalised plan for your finances, offer guidance regarding investments, and direct you through significant financial choices. A financial advisor may also assist you in maintaining your current course while assisting you in making any necessary alterations to your plan.

If you live in Australia and are unsure about whether or not you should make use of the services of a financial advisor, you should consider asking yourself the following questions:

• Do I have a solid plan to reach my monetary objectives in the foreseeable future?
• Do I have the time and the financial expertise necessary to manage my finances efficiently?
• Do I have the confidence to make significant decisions on my finances on my own?
• Do I believe that I can successfully negotiate complicated financial difficulties and regulations?

If any of these questions elicited a response of "no" from you, it is highly recommended that you investigate the possibility of working with a financial advisor. They can give you the guidance and assistance you require to make well-informed decisions and realise your monetary objectives.

Would you like to speak to a specialist? Book a complimentary discovery session by calling: (03)999 81940 or emailing team@klearpicture.com.au.

Content Summary

• A financial advisor can provide valuable insights and expertise in managing your finances, helping you make informed decisions that align with your financial goals.
•  You will be in the greatest possible position to achieve your financial goals if you are able to locate a financial counsellor who is also skilled in financial planning.
•  If you are primarily interested in expanding your portfolio or saving money for retirement, it is likely in your best interest to speak with a financial counsellor.
• That is entirely dependent on the requirements that you personally have.
•  Most of the time, financial planners and advisors either work for a company that also provides financial planning services or work independently as both planners and advisors.
• If they do not work for a company that provides financial preparation and advisory services, they typically do one or the other.
•  There are a number of aspects to consider before deciding on a financial adviser in Australia.
•  It is essential to select a financial adviser who is both qualified and licenced to provide advice in the financial sector.
•  This licence is granted by the Australian Securities and Investments Commission (ASIC).
• You should look for a financial adviser with experience in the areas where you require assistance while selecting.
• For instance, if you are considering your options for retirement, you should look for a financial advisor that specialises in this area of planning.
•  Before you commit to working with a financial adviser, you must clearly understand the fees you will be expected to pay because different financial advisers charge varying rates for their services.
• Be sure that you clearly understand the fees that will be charged to you and the method by which they will be assessed.
•  Before selecting a financial adviser, it is a smart move to seek reviews and testimonials written by previous customers.
• You can either search for reviews online or request recommendations from the advisor.
•  You should ask where you can find a good financial adviser now that you know what qualities you should seek in one.
•  Asking for recommendations from people you know, such as friends and family, is one of the most effective ways to discover a financial consultant.
• They may have previous experience with an advisor that they are able to recommend to you, and by speaking with them, you can get a sense of what it is like to work with that particular advisor.
• There are a number of internet directories in Australia that have listings for financial advisers.
•  It is of the utmost importance to enquire about your financial adviser's credentials and level of expertise in the field.
• Asking your financial adviser about their investment strategy and how it relates to your long-term financial objectives is absolutely necessary.
•  It is crucial to thoroughly understand the fees and costs involved while working with a financial adviser because they charge for their services.
• Request that your advisor offer a detailed summary of their fees and charges, including any ongoing fees and the method by which they will be charged.
• It is of the utmost importance to have an understanding of how your consultant is compensated and whether or not any potential conflicts of interest could impact the advice given.
• Inquire about the communication plan that your advisor has in place, including the frequency with which they will communicate with you and the type of communication they prefer.
•  If you believe you have been given poor financial advice, the first step you should take is to make an official complaint with your financial adviser and the institution they work for.
• You have the option of appealing to the courts or to a complaints scheme for your industry, like the Australian Financial Complaints Authority, if their reply does not meet your expectations.
•  Both going to AFCA and appearing in court have their positive and negative aspects, and there are essential time restrictions for settling disputes.
•  If your case is unsuccessful, you won't be responsible for covering the legal fees incurred by your financial advisor.
•  There is the possibility of receiving compensation for lost opportunities.
•  Getting poor advice about one's finances might have extremely negative repercussions.
• Battling a financial advisory organisation and its insurer on your own is challenging, time-consuming, and tiresome, and it entails a significant amount of fine print and red tape.
•  Time constraints are attached to many types of financial advice dispute claims.
• The attorneys are very knowledgeable in the field of dispute law pertaining to financial advice.
• We will simplify this procedure by offering basic legal advice, beginning with determining whether you have a legal case and figuring out the most appropriate path for you to take from a legal standpoint.
•  In conclusion, proper financial planning is a crucial component of achieving success in the management of one's own resources.
• Working with a financial advisor can give you access to expert advice and direction, both of which can assist you in reaching your financial objectives.
• If you live in Australia and are debating whether or not you should seek the assistance of a financial advisor, the decision ultimately rests with you.
•  Nonetheless, it is essential to remember the many advantages of working with a financial advisor.
• They are able to assist you in developing a personalised plan for your finances, offer guidance regarding investments, and direct you through significant financial choices.