The best reasons for seeking financial advice may not be financial

Though we may baulk at the prices charged by financial advisers, what price should we put on peace of mind?

Money spent on financial advice will ultimately pay for many holidays.

Receiving advice when it comes to your super brings with it an outstanding tangible benefit — money, a lot more of it.

In 2022, industry fund Aware Super surveyed 100,000 of its own members and found those who had received financial advice from the fund had an average of $150,000 more in super at retirement — that’s four years’ worth of a modest retirement they didn’t need to fund.

Similarly, at a conference I attended, the CEO of another industry fund, REST Super, noted members aged 30 who seek financial advice will typically retire with an additional $240,000.

What an incredible investment!

It cannot be said the money required for a statement of advice — typically $2500 to $4000 — is unnecessary spending. It’s the cost of peace of mind — and, really, what value can you put on that? And, as an added bonus, if you seek general superannuation advice, you can claim the cost of the advice out of your super.

While it may seem counterintuitive to pay for the advice from your super — the very thing you’re trying to build up — you’re removing one of the barriers (cost) to you receiving said advice. You can, of course, choose to pay for this advice upfront as well...

According to the Australian Financial Adviser Landscape report, released by Adviser Ratings, only 1.9 million Australians sought financial advice in 2021. This represented just 10.1 per cent of consumers, and was down from 13.9 per cent in 2018.

The report also highlights the median ongoing fee has also increased over this period, going from $2520 to $3529 — an increase of 41 per cent.

These increased fees in the wake of the Hayne Royal Commission are blamed for the declining rates of advice by consumers.

Vanguard’s ‘How Australia Retires’ report from June 2024 also highlighted the cost of fees was the biggest barrier to seeking financial advice, according to 51 per cent of respondents. Other barriers included respondents not thinking they needed advice (27 per cent), lack of trust in advisers (20 per cent), and claiming they didn’t know how to find a good adviser (15 per cent).

The report also described the expected most valuable aspects of financial advice, as follows:

* emotional support, including ensuring their money sustains them throughout life (44 per cent)

* feeling confident in retirement preparations (39 per cent)

* understanding spending limits (37 per cent)

* ensuring a comfortable retirement (36 per cent).

Advice is so important for all the reasons just outlined. However, the greatest reason of all, I believe, is the peace of mind professional advice brings you — allowing you to feel confident about your strategy and have a clear plan.

While I’m not suggesting you have any a six-monthly review with a professional, having a review every other year, or at intervals which might be suggested by the adviser, can be prudent.

And remember financial advice can be paid via a retainer, or as a one-off fee.

Interestingly, investors say monetary benefits rank significantly lower than intangible benefits: according to the Vanguard report, only 22 per cent of respondents mentioned seeking advice to protect investments during market declines and 29 per cent cited seeking advice to earn higher returns on investments.

Why? Well, we know seeking advice will make us feel better about our financial future, and we value this above fiscal benefits, but… we’re too tight to do anything about it. So, we would rather worry and stress, and feel unconfident and ignorant than spend, let’s say, $3000.

Talk about not being able to see the forest for the trees. Isn’t it interesting — we’ll hand over $15,000 for an international holiday to Fiji, Bali, Malaysia or Singapore in the pursuit of physical relaxation, yet we baulk at spending perhaps 20 per cent of that on our financial and mental relaxation.

This is an excerpt from Rich Woman, Poor Woman by Pascale Helyar-Moray OAM (Major Street Publishing, November 2024)