Should I See a Financial Adviser

Hoju on 08/06/2017 - 20:34
Last edited 08/06/2017 - 20:35

I started a new job this year and companies keep coming in and throwing free lunches, but hoping you'll leave your details so they can offer their services.
I feel bad eating so much and not throwing them a bone, so I do leave my details.

Now I'm getting calls from financial advisers looking to help me save a lot. But to me they're just annoying, overly slick marketing types that annoy me with a lot of smooth talk and promises to help me improve my financial situation without any even moderate clues on how - tax savings, switching investments, whatever… and none have ever told me how much their services cost.
The last one wanted me to bring the whole family to their office for a chat, which I politely said was a terrible idea.
The only concrete example I've had is that I should buy an investment property that operated as a self managed super fund somehow. Except that locks away everything I put into it until I retire in another 30 years which I said was probably not something I'd be keen on.

Just wondering:
- do ozbargainers use financial advisers?
- are they expensive?
- how do they 'improve your financial position'?

In my case, I'm mid 30s, my salary is probably $35k, my wife's is about $50k, we have two kids and a mortgage with about $190k left owing which we're just plugging away at.
We basically pump everything into the mortgage, live frugally but comfortably, and save for one big annual holiday and a scattering of family weekend trips.

If people have a moment to share thoughts and experiences I'd be genuinely interested.

Financial

Comments

  • teacherer on 08/06/2017 - 20:52

    Good question
    Keen to hear peoples responses

  • kywst on 08/06/2017 - 20:59
    +7

    Tell them how much you earn and never hear from them again.

  • Skramit on 08/06/2017 - 21:02
    +1

    You might be better off asking for some general advice from an accountant at tax time rather than paying thousands for a financial planner to tell you the same general advice or sell you a product you don't need or want.

    If you have no current investments and want to change that, then a financial planner can be highly beneficial but if you would rather just plug away at the home loan and not invest in anything else then there's no point seeing a financial planner IMO.

    Generally speaking a financial planner will be aiming to transform your bad debt (home loan) in to good debt (investment interest tax deductions). So you and your wife pay less tax and are in a better financial position as a result of payin less tax and building up a small investment portfolio over time. They also can help high income earners pay less tax with various other methods such as trusts and so forth.

    • AlienC on 08/06/2017 - 21:08

      This was my ultimate guess. Rather than maybe just offer some sensational investment advice if they have any (other than gambling on bitcoins) they can micro manage your income and expenses or economics of your life and do some good old "Hollywood accounting" for you and maximise your return or payments on tax accounting.

  • PVA on 08/06/2017 - 21:04

    No you dont. They are sales folk trying to flog you are product. And one way is to make you feel guilty and think you need it.
    Tell them you arent interested.

    And next time dont give your correct phone number.

  • kipps on 08/06/2017 - 21:13

    Be very careful with advisors. Most are on trailing commissions and only recommend investments that feed them.

    Go for one offering "fee for service".

    Don't invest purely for tax reasons. Otherwise you will be burnt. (Eg Timbercorp).

    Read basic financial literacy books. Rodger Montgomery does great work in Australia. Ben Graham is good for valuing investments. Paul Clitheroe writes good books about taking little steps to save up.

  • Skramit on 08/06/2017 - 21:15

    Also remember financial advisors really come in to high value for retirees and nearly retired folks to manage super, minimise tax and advise about death taxes etc.

  • superb on 08/06/2017 - 21:25
    +1

    With property and share prices as they are now there are not many bargains out there. The best free advice is to pay off your home loan as soon as you can and when you are close to being free from debt maybe it would be time to contact someone for advice. As you are not on the highest tax bracket the benefits of negative gearing are also lower.

  • altomic on 08/06/2017 - 21:27
    +1

    I paid $x to see a fin accuntant for advice abut salary sacrifice as I work for benevolent institution. He did not tell me a thing I didn't already know. I.e. waste of money.

    For your salary and mortgage it sounds like your doing it right.

    Enjoy the free lunches.

  • Hoju on 08/06/2017 - 21:42

    Thanks for the advice so far, it seems in line with my instincts.
    Essentially we have no financial leeway to be anything but conservative with our money, and so putting it all into our biggest and probably most appreciating asset seems like the best bet.

    I think we're doing all the right things - salary packaging to the maximum degree, have an offset account, minimal smashing of avos.

    And my hunch is that when someone is talking that smoothly and being that nice to someone they've never met, they probably aren't being entirely honest.

    I'm still very curious as to what they charge. I'm sure they'll call me back, at which stage I'll ask point blank.
    One of my colleagues did mention that one of the places had a $700 price tag.

  • railspider on 08/06/2017 - 21:47
    +2

    A "real" financial adviser would give you a free initial meeting to understand your circumstances, and give you an idea of what services they could provide you and for what cost.

    A good rule of thumb is not to engage the services of anyone (financial advisers included) that gets their business by calling you by phone. They're more salesmen then advisers. Do your own search for an independent adviser, and arrange that free first meeting.

    That said, based on your age, combined salary and outstanding mortgage - creating an SMSF and buying an investment property sounds like an absolutely awful idea.

  • ziaxk87 on 08/06/2017 - 21:56

    have you tht about renting your place and negatively gearing your house… you will add more money in your mortgage by paying less tax..

    • Hoju on 08/06/2017 - 21:59

      We did consider it but only owe about 190k so it's too hard to negatively gear it, based on my admittedly not very good understanding of the whole process.

  • tsunamisurfer on 08/06/2017 - 22:14
    +9

    I hate to be that guy but with all due respect, if at 35 you are making $35k you don't need Financial advice, you need Career advice.

    You will not profit from the advice of a Financial advisor since :

    a) tax minimisation is useless to someone on the second lowest tax rate tier.
    b) you have no money to invest.
    c) you won't have much money for insuring your life or income.

  • PJC on 08/06/2017 - 23:20

    Just keep eating the free lunches.

  • Azrael169 on 08/06/2017 - 23:26
    +1

    No offence intended but you don't earn enough for financial adviser. Go purchase the book "Barefoot Investor" by Scott Pape and follow his advice regarding a) getting a better mortgage rate, b) emergency cash funds, c) super. Otherwise yeah, plug away at your mortgage. Your doing well all things considered (most people would dream of a mortgage of only 190K)

    Having said that unless you are super attached to your current job you should be able to fall over and basically land a job that pays more…

    Financial Adviser would be beneficial if your personal (not combined) income was 100k+. For those wanting to see a financial adviser I suggest you find one that charges a fee up front and gives unbiased (eg dosnt earn commision) from the advice that he then gives you. This is speaking from experience… See one a few years ago, got lumped with a average super fund, average income protection/life insurance and they were phoning 3-4x a day trying to get me to buy their investment properties… Never again!

  • Hoju on 09/06/2017 - 07:00
    +1

    Thanks for the additional input.
    I guess the reason I am being targeted by these people is that I'm a doctor so my potential salary is high. It's low now as I'm part time and choose to be a dad as much as possible (And juniors are paid like sheet)

    It's good to have examples like the above to consider as that is the sort of situation that I was exactly concerned about.

    Funnily enough I told her my income straightaway and said I can't imagine you'll get any tax savings out of that but she just kept on talking and talking without really offering exactly what they might do.

    • Azrael169 on 14/06/2017 - 11:57
      +1

      I'm also a doctor, my wife and I fell for one of these 'medical financial specialists'. A couple years on we are still unwinding the crap they set us up for! These advisers are predatory, avoid at all costs.

      • Hoju on 14/06/2017 - 12:00

        Ah unlucky, but thanks for sharing. I shall avoid avoid avoid! But continue to enjoy the free lunches guilt free as it seems they're not out to help as much as they might suggest…

  • mrtin on 29/06/2017 - 19:29

    Im an adviser. I suggest ppl consider using ozbargain to save money.

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