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The Value of Getting Financial Advice

Posted on 16 Aug 2010 inside News, Public Service

I will often get phone calls from potential new clients wanting to understand the financial planning process a little more and it is often hard to give a tangible answer as everyone’s situation is different and will result in a different value for the advice.

New research conducted by KPMG Econtech and commissioned by the Investment and Financial Services Association (IFSA) was released in November.

The research found that people who seek the advice of a financial planner are better off by an average of $2,457 each year, compared to a similar individual who does not have a financial planner.

So what does a financial planner do to add value to your situation you may ask?

Step 1: Where are you at?

This stage is the information gathering stage which is important for both parties to get an understanding of where you currently are with regards to the resources you can use towards your financial management. This can include your income, assets and also has a lot to do with your habits and attitudes that currently come into play with your money.

Step 2: Where do you want to be?

This can sometimes be the hardest part of the process as this is the goal setting phase and involves putting your dreams, hopes and thoughts for the future into tangible outcomes.

Step 3: Your strategy development

This is where the training and knowledge of the financial planner comes into play and should also include collaboration with your other professional advisers. This collaboration will ensure that other strategies and structures you have in place will work together to achieve your outcomes. This area could include your cash flow, superannuation, wealth creation and back up plans. Each of these areas has different strategy solutions which may be suitable for you depending on your comfort and level of willingness to be involved in the day-to-day process.

Step 4: Review of your Strategy and situation

For each area of strategy development there will be a financial product solution which will help to achieve your goals. This could depending on the advice be a managed investment, or direct investment product which is based around debt investments such as cash, term deposits or government or corporate debt or equity investments such as property, shares which could be local or internationally based.

As with all planning and strategy development it is important to regularly review your strategy to ensure it is continuing to meet your needs and to check in to see if any of your goals or plans have changed.

If you want to review your current situation, be it your superannuation plans for your current defined benefit, retail, industry or self managed super funds, or your wealth creation, cash flow or back up plans contact Money Mechanics today.