Retirees must be more proactive and ask more money questions: expert

RETIREES should question guidance of financial advisers, press them on how they are paid and seek a second opinion if they’re still feeling unsure.

Older Australians’ money “gardens” need careful tending, an expert points out.

RETIREES should question the guidance of financial advisers, press them on how they are being paid, and seek out a second opinion if they’re still feeling unsure about the information they have received.

These are the steering tips from economist Saul Eslake, who says that any advice that appeared “too good to be true” was usually worth avoiding.

Speaking in the wake of the Royal Commission into banking misconduct, the former ANZ chief economist who left in 2009, said retirees needed to be proactive when it came to holding their financial advisers to account.

Do your own research to see if advisers’ claims stack up.

As a first step, retirees should figure out what their long-term goal was, whether it be capital growth, a comfortable life or having money left over for the grandkids, he said.

By identifying a goal, retirees could view their financial adviser through a lens as to whether their priorities were being met, Mr Eslake said.

Secondly, retirees should be prepared to pay for advice, but warned against those seeking commissions.

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Mr Eslake also recommended retirees to seek a second opinion if the advice they were being given was life-changing, such as selling a house.

“You have to be willing to ask – why are you recommending this, what are the alternatives and what’s in it for you,” he said.

“I think this is important particularly in light of the revelations out of the Commission, such as the where a nurse was told to sell a house.

“Customers need to be sceptical and ask questions and not take anything for granted, in the same way you seek a second opinion when a doctor recommends a treatment that will alter your life.”

Retirees also needed to avoid any advice that relied on exploiting the tax system such as incurring a loss early up with the promise of greater gains in the future while also diversifying their investments so as not to have all their eggs in the one basket, he said.

Advisers that also charged a percentage a percent of money managed should also be avoided.

Ageing Minister Tanya Davies said retirees should do their homework in checking the credibility of a financial adviser rather than trusting their credentials at face value.

Retirees should also take advantage of online calculators to work out if the benefits the adviser was offering “stacked up”.

If concerned at being ripped off, retirees should take advantage of the NSW Elder Abuse

“Don’t be afraid to speak up, ask questions, be assertive,” she said.

“This is about your financial future.

“The main thing is not to trust what someone says to you at face value – do your homework and get a second opinion, or a third. And don’t sit in silence – call the helpline if you feel you are in a situation where you need help.”