Are financial planners worth their cost?

Kenji2014 on 03/06/2021 - 18:07
Last edited 03/06/2021 - 18:07

Has anyone here employed the service of a financial planner before? If yes, how was your experience and did you think their value justified their fee?

I’m thinking of getting into share investing e.g. via ETFs and wondering whether I should see a financial planner before proceeding. I would say that I have a relatively good foundation of general financial management such as budgeting, cashflow, types of assets, leverages…but definitely not an expert. I know my goals, risk tolerance level and investment horizon…

Looking forward to hearing anyone’s experience and advices.

Thank you.

Poll Options expired

  • 8
    Totally worth the cost
  • 41
    Not worth the cost
Financial

Comments

  • bobbified on 03/06/2021 - 18:14
    +6

    Like everything, there's good ones and bad ones.
    Pick the right one and he/she will probably be worth the money. Keep in mind that your expectations have to be realistic too - they're not going to magically make you rich.
    Best way would be through word of mouth or recommendations.

  • ChrisLevo on 03/06/2021 - 18:16
    +5

    Followed the advice given by our planner for the last 15 years and have a seriously better financial position than if we had not.

    Worth every cent!

    However, we made sure that he has all of the qualifications necessary (and then some) and checked his references.

    • ty99234 on 03/06/2021 - 21:52

      if I don't mind me asking, what's the realistic return % I should expect from a financial planner?

      • bobbified on 03/06/2021 - 22:48

        …what's the realistic return % I should expect…

        There is no real answer to your question. You can't just look at a return% by itself and say whether it's good or bad.

        A return of 1% could be called "an awesome result" if everyone averaged, say, negative 10% for the same period. Or a 20% return could be classed as "below average" if the average return for the period was 45%. So what's "good" and what's "bad" is relative to what the average market return for that period was.

      • mrtin on 03/06/2021 - 23:00

        I think that's a typical question people ask however is not the right one.
        The value of an adviser is to provide you with a plan (as they are a financial planner after all) to put all the pieces of the puzzle together. This includes your retirement, your debt, estate planning, the what if something goes wrong. Then work out what is the best product and investment portfolio would best suit. A lot of people cite peace of mind as a benefit when they have an ongoing relationship-they don't worry or continually think about finances. They have a plan and know things will be OK.
        If you want the above, go seek a financial planner!
        If you are just interested in returns then an adviser might help, or reddit, or ozbargain. Each to their own really.
        Good luck

  • Seraphin7 on 03/06/2021 - 18:19

    The first question is what do you expect to get from the financial planner?

    Many people don't know (1) what they want, and (2) whether a financial planner is the place to get it. They then walk away either totally confused, feeling ripped off, or both.

    So … what do you expect to get from the financial planner?

    • Kenji2014 on 03/06/2021 - 18:31

      I have done some research and drafted out an investment plan including the investment products, their allocations…I want to run it by a pro and get their advice on whether the plan is feasible or a complete fantasy.

      • Seraphin7 on 03/06/2021 - 18:42
        +5

        Hmmm … you'll need to shop around. Many financial planners effectively have their investment models built around a risk profile. They are not able/willing to comment on whether alternative investments will or won't seek your needs.

        You'll need to shop around for this and effectively find someone who's willing to consider your plan on a hourly rate basis (and that you're happy to pay the hourly rate), but understand there probably won't be a "statement of advice" arising from this.

        Frankly, you're better off running this past "trusted friends" (who know what they're actually talking about) in the scenario you've painted.

        • mrtin on 03/06/2021 - 23:04

          You are right. You can find an adviser who is happy to sit with you and charge by the hour.

        • Kenji2014 on 04/06/2021 - 09:19
          +1

          Thank you for the advice.

  • netjock on 03/06/2021 - 18:45
    +2

    I’m thinking of getting into share investing e.g. via ETFs

    If you know what ETFs are then you probably don't need one.

    Financial planners aren't necessarily bad especially for people with no financial discipline. The type that lives pay check to pay check with no savings or they invest in something and always end up losing money.

    Even those people need to read into what is being recommended by FPs. Good FPs is like a personal trainer that is constantly keeping you according to plan. Unfortunately most are just doing a job to make ends meet.

    • Matt P on 03/06/2021 - 22:30
      +2

      I like the personal trainer analogy. If you know what ETF's are, you're the kind of person who joins a gym, goes and does stuff on the machines and gets fit on their own. The sort of person who will benefit the most from a fin planner is the sort of person who switches to coke zero from normal coke to get fit.

    • Kenji2014 on 04/06/2021 - 09:20

      Thank you for the advice.

  • demiurge on 04/06/2021 - 09:44
    +1

    No

  • Cheeper on 04/06/2021 - 10:44
    +1

    Generally no.
    Most want to push their own products for the comission.
    There are genuine unbiased advisors but they are hard to find.

    • mrtin on 04/06/2021 - 11:30

      Are commissions still around for super and investments? I thought they were banned in 2014. So if someone seeks advice they should be required to pay a fee for service, as opposed to getting a commission?

      • Seraphin7 on 04/06/2021 - 12:15
        +1

        All commissions are now removed for investment/superannuation products.

        Still legal for life insurance.

  • rektrading on 04/06/2021 - 12:26

    Financial advisors = car sales people.

    AMP fined $5m for allowing financial advisers to rip off clients
    Federal court ridicules company’s defence of just one ‘bad apple’, saying financial services group was ‘the right place’ for greed
    https://www.theguardian.com/australia-news/2020/feb/06/amp-f…

    • mrtin on 04/06/2021 - 12:33

      if they dont get fat juicy commissions then what are they selling?

  • dust on 04/06/2021 - 15:57
    +1

    No. DCA into VDHG or DHHF.

    • Kenji2014 on 04/06/2021 - 16:57

      Thanks for the advice

  • mrtin on 04/06/2021 - 16:15
    +1

    Anyway, my last comment in this thread. Many people relate financial adviser to return only. There is more to financial planning than just returns and %. Go see one and find one that will help you plan your finances long term.

    All licenced financial advisers are listed on the asic financial planning register along with their complete work history and qualifications. https://moneysmart.gov.au/financial-advice/financial-adviser…. If they've worked for 10 firms in the last 2 years, then be cautious.
    Word of mouth from someone who has actually sought advice will help too. Not someone who just reads stuff in the media.
    Good luck

    • Kenji2014 on 04/06/2021 - 16:58

      Thank you for the advice.

  • Keplaffintech on 04/06/2021 - 18:04
    +1

    Depends on how much money you have. Most planners have an initial fee of thousands of $$ or so.

    If you run into a more money than you know what to do with, financial planners are great.

    • mrtin on 04/06/2021 - 21:14
      +1

      That is true. Cost is in the thousand plus, unfortunately. Too much regulation.

  • negger on 04/06/2021 - 18:30
    +1

    If you have a bucket load of money and do not know what to do with it then a planner makes perfect sense.
    If you are building something from scratch with a modest capital and have a fair bit bit of an idea of the direction then planners may not be of much use. Financially savvy family & friends could potentially help here better.
    Remember that the good ones are very few and far in between and you must do some heavy lifting yourself regardless.
    Important to perfect your w@nker detection techniques too.

    • mrtin on 04/06/2021 - 21:13

      I wouldn't classify the majority of my clients as having bucket loads of money. Really just average everyday Australians who are open and willing to seek assistance. I think that is a common misconception. Too many out there, especially from many who have never sought advice or had a negative experience.

      • negger on 04/06/2021 - 23:00

        I have never been to a planner for my needs specifically but deal with similar crowd very often. Out of curiosity, what specific benefits an average guy gets from a planner?

        • mrtin on 05/06/2021 - 14:06

          In no particular order, they get a filter to filter accurate or rubbish. You get a professional opinion on things. You wouldn't believe how much crap is on the internet and yes even on ozbargain forums from the lounge chair adviser.
          You get peace of mind. Clients don't have to worry about things they get advice on. Eg clients know if something goes wrong their insurances are adequate and are more likely to pay out. Filter out rubbish policies (with proper research and comparison of definitions not just relying on John on fb).
          Eg clients know they are on track to retire by say 60 on x income with what they are doing.
          Eg they know they are on track to retire and at the same time be able to pay off loans and pay for cost of kids and holidays.
          Risk is managed properly and thoughtfully.
          Eg they know the product they have whether it is super or an inv platform or insurance is appropriate and understand the reasons why. They understand the difference between host plus indexed balanced fund or rest indexed fund with fee at 0% and a "normal" index fund. They make informed decisions with information from a professional.
          Clients get the advantage of the adviser dealing with many other people in similar boats and we know what works and what doesn't.
          Strategies are based on more than hope for the best. There is thinking behind a strategy whether it be tax or potential future changes for example.
          Clients know the income they draw will likely last their lifetime. Isn't that comforting?
          Centrelink benefits are maximised. It is exciting to get people full age pension when they have quite a $$ in assets.
          Clients understand the difference between a free, unlicenced and uneducated call centre person from a super fund giving "general advice" compared to a licenced financial adviser.

          Yeh I get there are people out there who think they can deal with all of the above. They ain't going to get and pay for advice! But, there are definitely people out there (not just financially illiterate people) who choose to outsource this and spend time with their family and or enjoying life in general.

          Good luck!

          • negger on 05/06/2021 - 14:30
            +1

            @mrtin: Thanks. Not denying the fact that there are a lot of people out there who are financially illiterate and the service could be quite useful.

    • Kenji2014 on 05/06/2021 - 07:04

      I'm definitely fitting in the latter scenario. Thanks for the advice.

  • Trying2SaveABuck on 05/06/2021 - 00:01
    +1

    My opinion is this if you got little or low financial literacy then a Financial advisor might be a good idea.

    If you all of a sudden fall into a truck load of cash ie win the lotto, inherit it etc I would suggest talking to a Financial advisors and an accountant because 1/3 of instant millionaires end of broke in 5 years.

    Financial advisors for everyday earners are IMHO a colossal waste of money, just read some boring boomer book like the barefoot investor and stick to the advice - statically paid advice doesn't out preform simple low fee index funds.

    • Kenji2014 on 05/06/2021 - 07:05
      +1

      Thanks for the advice.

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