Four ways to extract maximum value from a financial planner
Professional financial advice should deliver more than just an investment portfolio. Here’s how to get value for your money.
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Good money advice is more important than ever as the pandemic pummels household finances, and financial planners are often well-placed to provide it.
However, less than one quarter of Aussies use a professional planner, and many believe they are mainly investment advisers and insurance salespeople.
However, wise use of a financial adviser can potentially save you thousands of dollars a year through tax tweaks, retirement strategies and spotting expensive errors in your money management.
Here’s how to extract maximum value.
MEASURING GOALS
Russell Investments head of distribution Tanya Hoshek says people can use financial advisers to set and prioritise their goals.
“Advisers can translate these life goals into financial goals and key metrics that can be measured along the way,” she says.
TAX TACTICS
“Ask how your adviser can help you make tax-savvy decisions,” says Hoshek.
This can include minimising tax on investments, salary sacrifice into superannuation and transition to retirement strategies, she says.
Wealth for Life Financial Planning principal Rex Whitford says financial planners are not tax agents and “can’t do your tax return for you”.
But they can provide strategic advice that dramatically cuts tax paid through work and superannuation, he says.
PROBLEM PREVENTION
Whitford says an important role of planners is understanding your relationship with your money and “identifying the landmines”.
“You don’t know what you don’t know, and with the shifting sands of the economy and legislation you sometimes won’t know you have stepped on a landmine for years after the event,” he says.
“Sometimes it’s stopping people from doing things they shouldn’t do.”
LOOK BEYOND SHORT-TERM NUMBERS
Use a planner to understand just how much money you’re likely to need to retire comfortably – based on your unique financial situation.
“Many people are going to have too much life for not enough money at the end,” Whitford says.
Hoshek says people should ensure they have continuous communication with an adviser who looks beyond the numbers.
“Understanding their client’s feelings is a key component of an adviser’s role as a behaviour coach, helping you avoid common investing pitfalls such reacting to short-term market volatility which can undermine your long-term objectives,” she says.
@keanemoney
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