Thinking about financial advice? Don’t make this costly mistake

I received a gut-wrenching letter the other day from a pre-retiree who had just seen a financial adviser – and walked away deeply disappointed.

She and her partner had been diligent savers, carefully building their retirement nest egg in one of Australia’s largest super funds. They weren’t looking for magic solutions – just solid, independent advice to help them map out their retirement strategy.

They wanted to understand their options for their investment property, make informed decisions about their super, and see projections of how their retirement income might play out under different scenarios before making the shift into retirement.

If you don’t know what you’re getting into, or you don’t ask the right questions, financial advice can seem confusing and expensive.Credit: AFR

Their first appointment started with the usual – filling out a stack of forms before they even stepped into the room. Then came what felt like a pleasant, productive chat with an adviser personally recommended by a dear friend.

But when they received their Statement of Advice (SOA), reality hit hard. The document was 70 pages long, packed with complex jargon, and the primary recommendation? Take their super out of a high-performing fund, open a wrap account, and invest in a model portfolio.

Looking back, they admit they didn’t understand the advice process or ask the right questions – and they didn’t tell the adviser this upfront, which might have helped simplify things. They also didn’t realise they had to explicitly state they were happy with their existing super fund, a consistent top performer.

At the end of the day, you’re paying for advice that helps you – so make sure you’re getting value.

Their SOA contained no retirement projections, strategy, or mention of their rental property – just investment recommendations and a complex financial structure they’d never heard of.

“Our paid advice was to put all our super into one of those wraps – something we have no experience with and no knowledge of. It was a big shock, especially since it wasn’t even discussed in our initial meeting,” she wrote.

If they’re still in the accumulation phase, any shift could also have major tax implications too.

She feels foolish, but she shouldn’t – because this constantly happens. Advisers and everyday clients often speak entirely different languages. Neither is wrong, but the world of wraps, SMAs, and managed accounts is second nature to financial professionals, while for most people, it’s like being handed a foreign language textbook with no translation.

The problem in my opinion is that many clients don’t even know what questions to ask in that first meeting. Most walk in hoping for guidance on what’s really right for them and how to shape their financial future. But many people struggle to articulate this clearly because they don’t know what’s possible.

It reminds me of that moment in Philadelphia, when Denzel Washington’s character says, “Explain it to me like I’m a six-year-old.” If only more people felt empowered to say that to their financial adviser.

Let’s be real – financial advice isn’t cheap. It’s not something you want to pay for twice, so you need to get it right the first time. Today, I want to unpack this experience, highlight the key lessons we can all take from it – so you and your adviser are speaking the same language from day one.

1. Understand what advice you actually need

Are you looking for a strategy, investment advice, or both? Understanding this upfront is crucial for two reasons. Strategic advice takes time.

A good retirement strategy isn’t something an adviser can throw together after a quick meeting. It requires careful analysis, financial modelling, and planning – all of which take about a week of work from the adviser and their team (often paraplanners).

If you’re after strategy, but you’re not paying an upfront fee, you might not be getting a strategy at all – you might just be getting investment advice, which is a very different thing. And you might not know the difference.

In contrast, investment advice is often tied to products and portfolio management. Many advisers are primarily focused on managing investments because that’s where they can charge ongoing fees.

If your adviser isn’t charging an upfront fee for strategic planning, but is eager to set up a wrap account or other investment structure, it’s worth asking: am I actually getting financial advice, or am I just being sold an investment product and ongoing servicing of it?

There’s nothing wrong with that – just know you’re buying it and do it with clear understanding and intent.

2. Be crystal clear on what they are recommending – and why

If your adviser suggests moving your super or investments, make sure you understand exactly what they’re proposing. Are they recommending shifting your super from a super fund into a wrap account, model portfolio, or retail fund?

These options are often preferred by advisers because they allow for ongoing portfolio management – something they charge for as part of their ongoing service.

Next, compare it to your current setup. Are there extra fees? Is it more complex than you need? Will it require more ongoing management than you want?

All of this should be outlined in the Statement of Advice (SOA) – but let’s be honest, those 70+-page documents aren’t exactly user-friendly. Many people don’t know how to interpret them, and that’s where things can go wrong.

The couple I mentioned earlier were happy with their super fund’s performance – and for good reason. Their balanced growth fund returned exceeding 13 per cent last year, outperforming many model portfolios used by advisers in the same category, and it had lower fees.

So always ask ‘Why is this recommended over what I already have?’ and ‘What are the real costs and risks?’

A good adviser will explain their reasoning clearly and be open to feedback and adjustments – because financial advice should be tailored to you, not just the products they prefer to manage.

3. Consider what you actually want from an adviser

Financial advisers can be enormously valuable – but only if their service matches your needs. Ask yourself three questions. Do I just need a one-off strategy session to get clear on my plan, then I can handle the rest?

Do I want ongoing advice, with someone to call throughout the year about tax, investments, and market changes? Do I need full investment management, or would I rather keep things simple with my super fund handling everything?

If you prefer hands-on, personalised guidance, paying an ongoing fee for an adviser might be worth it. But if you just want clarity and direction, a one-off strategic session could be the better option – plenty of advisers offer these, but you’ll need to ask upfront. Your choice will shape how an adviser approaches your situation, so make sure you’re clear from the start.

4. Make sure the adviser specialises in your stage of life

The advice you need 20 or 10 years before retirement is very different from what you need as you approach retirement or once you’re retired. Some advisers focus on accumulation (building wealth), while others specialise in retirement income strategies.

If you’re nearing or in retirement, you need an adviser who can help you structure retirement income streams so your super lasts, and advise on pension eligibility, tax strategies, and drawdown rates.

And you’ll want that person to be able to guide you through estate planning and aged care considerations and provide you with retirement strategy and projections – not just investment recommendations.

Not all advisers are skilled in these areas, so ask directly: do you specialise in retirement strategy and planning, or is your focus mainly on investments?

5. Don’t be afraid to push for clarity

The best financial advice isn’t complicated – it’s clear and actionable. If something doesn’t make sense, push back. Ask your adviser to explain it like you’re six years old. A good adviser won’t make you feel stupid – they’ll be thrilled that you’re asking and will take the time to ensure you understand.

At the end of the day, you’re paying for advice that helps you – so make sure you’re getting value. And if you’re not sure? Don’t be afraid to meet two or three advisers before choosing one to build your strategy.

Bec Wilson is author of the bestseller How to Have an Epic Retirement. She writes a weekly newsletter at epicretirement.net and is host of the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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