There’s a few reasons you probably haven’t considered seeking financial advice. You may worry that the cost will be too high. You may worry that you’ll be pressured to spend money you don’t have on something you don’t want. You may think you’re not wealthy enough. You may think consulting an adviser is for when you’re ready to retire.
The Financial Advice industry can be daunting. The average Australian’s financial literacy is poor at best, and talking about money with a money expert can be intimidating. Will they raise their eyebrows at your previous decision making? Will they wonder why you’re not well ahead of where you are? Potentially. But there’s roughly 7,000 independent financial advisers in Australia. We’re spoiled for choice. Choosing to NOT consult an adviser based on speculation of what you may encounter is foolish. And you’re no fool!
Here’s some of the myths we come up with on a regular basis. Hopefully after reading these some of you will decide that meeting a financial adviser is a worthwhile move.
Financial Advice Myth #1: You Need A Lot Of Money Before You Need Advice.
There’s nothing further from the truth. You set the goal, the adviser looks at your financial situation, then provides advice on how best to get there. Everyone’s circumstances are different, and while you can source generic advice from a myriad of people and websites, you should be seeking advice that’s specific to YOU.
Financial Advice Myth #2: Advice Is Only For Ages 50+.
Certainly those nearing retirement have a larger investment pool and are actively seeking to build retirement wealth. It’s why the majority of those who seek advice are aged 55-64.
But a financial adviser can help someone:
> in their 20s, locked out of the property market, seeking a plan to increase wealth another way
> in their 30s, starting a family, looking to restructure their finances
> in their 40s, greater discretionary spending, trying to decide where best to spend it
Financial Advice Myth #3: You Need To Be A Man.
Statistically men seek financial advice more than women. This could be due to traditional breadwinner roles, earning capacity, delegation of household responsibilities or a disparity in financial literacy. But now more women are in the workforce and working full time. It’s not a good idea to rely on the man to be the sole manager of the money.
It doesn’t help that only 20% of Australia’s advisers are women. However – in a move that will benefit women – the financial advice industry is transitioning from a commission-driven sales approach to fee-based consultative planning.
It’s vital that women to review and plan for their financial future. Women tend to earn less, save less, and live longer, so understanding financial opportunities and strategies – and how to implement them – should be a goal.
Financial Advice Myth #4: Advisers Push You Into Products That Make Them Commissions.
Ok – this is actually a half myth. In Australia about 60% of advisers are aligned to one of the major financial institutions, each with a myriad of products they are able to offer relevant customers. The financial advice industry used to follow a commission-driven sales approach, and recently all four big banks have committed to winding back the “deep-seated” culture of product-based incentive payments.
In 2015 Future of Financial Advice (FoFA) reforms were introduced to combat poor industry behaviour and provide protection to clients. This included a ban on commission-driven advice so advisers can’t recommend products that earn them high commissions.
All advisers will recommend a suite of products that they are aligned to. If you’re worried about the transparency of this, you’re best to look for an independent adviser who isn’t aligned with the ‘Big 4’ – CBA, NAB, ANZ, and Westpac.
Financial Advice Myth #5: Your Finances Are Too Simple For Advice.
You might not have a lot to manage, but it’s possible you’re missing out on opportunities because you don’t understand them.
Instead you should treat a financial adviser like your doctor. Having an adviser working with you throughout various stages of your life is akin to seeing a doctor over time for annual checkups. The relationship you build helps you spot an issue in its early stages, instead of when you’re in tremendous pain. Plus it never hurts to get a second opinion!
Financial Advice Myth #6: Advisers Only Advise on Investing.
Yes, the goal of a financial adviser is to provide you with advice that will generate and protect your wealth, and investing does play a key role in this goal. But a good adviser should be able to advise on everything in your financial life – including budgeting, insurance, and estate/retirement planning, among other things.
Relationships aren’t set in stone – if you’re not happy with the service you’re receiving you can always consider someone new.
Financial Advice Myth #7: You Should Use The Adviser Your Friends Use.
It’s likely your friends have different financial objectives and requirements to you. They may be seeing someone about retirement planning or wealth protection, whereas you may be seeking specialist advice on legacy planning or investments.
This means the outcomes their adviser is achieving can’t be indicative of what the adviser could achieve for you.
Our advice? Talk to your friends about their experience as a whole, but seek out your own adviser.
Financial Advice Myth #8: Financial Advisers Will Do It All.
An adviser’s job is to work with you to identify financial goals, and methods to achieve them. Their job isn’t to do your hard work – which is normally the spending less/saving more part! There’s also tasks they can’t do for you, either because they’re not authorised (i.e. opening accounts) or it’s a foolish waste of their time/your money.
Advisers can act as a sounding board, and provide accountability along the way. They can’t stop you from sending money to an advance fee to that Nigerian prince, but they’ll definitely advise against it!
Financial Advice Myth #9: I Only Need Investments That Are Tax Deductible.
If you’re in the highest income tax bracket then yes – having some tax deductible investments is probably a good idea. However, this should never be your primary reason for making an investment.
A financial adviser works with you to review other considerations, such as your overall objectives and requirements, opportunities for capital growth, investment accessibility, entry/exit costs, and your timeframe. Their job is to make sure multiple boxes are ticked. A tax refund of $5000 now is worthless if years later you face losses 10x that.
Financial Advice Myth #10: Buying Shares Is Just Glamourous Gambling.
The reality is that if you’re part of a younger generation, and you can’t tap into a large cash resource, it’s unlikely you’ll be able to afford to own a property in a capital city (where it’s likely you’ll want to buy said property). While traditionally property has been seen as a low-risk, low-impact way to build wealth, there are other ways as well. The share market is one of them.
To buy shares in a company, that company must be listed on the stock market. To list on the ASX for example (the Australian stock market), the company must have a minimum of 300 non-affiliated investors @ A$2,000. They must have A$4 million net tangible assets. They’re not going to disappear overnight. They provide a solid foundation for some good, long-term portfolio and wealth building.
Yes there are no guarantees when it comes to the share market. The financial operations and health of the businesses you are buying shares of are subject to numerous internal and external influences – a number of which are beyond your control. However it’s not gambling.
Financial Advice Myth #11: Understanding Who To Use & Trust Is Hard.
If you’ve decided you’re ready to seek advice, what do you do? You could ask your network if they know anyone, but that may create questions that you don’t really want to answer (and don’t have to!). So then it’s likely you’ll go where everyone else goes – Google. A search for Financial Adviser Australia returns 1,420,000 results. The first few are ads followed by industry sites like MoneySmart and the FPA.
Realistically it’s going to take you a good day or so to visit a number of websites to find what you’re looking for – if you know what you’re looking for. Are you going to be bothered?
If you’re starting with a search engine then yes – finding the right adviser can be a challenge. But if you use My Next Advice to find an adviser, you’ll be connected to up to three advisers who understand what you want, understand how they can help you, and have an authentic track record with their clients.
Using www.mynextadvice.com.au will help you find someone to use who you can trust:
- We’re independent. None of the advisers on our site are owned or incentivised by us in any way. We simply connect you to them.
- We structure the process to you. Firstly you answer some questions about what you’re looking for. Then we match you up to an adviser based on their specialty. If you’re seeking advice about investments for example, you’ll only be connected to an adviser who says they specialise in that field. You won’t be connected to a superannuation specialist. What’s the point in that?
- We show you the best. All visible advisers have been vetted by their clients to provide ratings on trust, communication, understanding and best interests. The advisers with the best ratings are eligible to receive leads.
- You make the decision. If the adviser feels they’re in sync with what you’re after, they’ll call you. It’s up to them to win your trust and your business.
- It’s free. Use of our service is free. Speaking to an adviser we connect you with is free. If at the end of the phone call, you decide to take it further then that’s where you’ll start to incur costs. Once the adviser starts to invest their time to work on advice for you, you will need to pay them. This will be based on proposal you approve.
- No fancy speak. Our site is simple because we are (haha!). Seriously though we’ve tried to remove as much financial jargon as possible. You can always contact us if you’re not sure what you want. We’re happy to help.
If you have financial goals and objectives, you don’t need to attempt to achieve them on your own. A financial adviser (or planner) spends their days identifying and presenting opportunities to their clients. Our simple, quick, free service will connect you to the best financial advisers, based on your needs. Click here to get started.
The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a financial adviser or other finance professional.