Do you recommend having a financial planner? I am interested but unsure about the cost? I googled around, and how do you find a good one? What is the cost involved? Are they worth it?
Do You Have a Financial Planner? What Is The Cost Involved? Is There an Ongoing Cost?
chrismatt on 24/01/2022 - 14:31
Last edited 24/01/2022 - 15:12 by 1 other user
Last edited 24/01/2022 - 15:12 by 1 other user
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Ha ha Ha.. No I am not looking for a financial advice. I just want to know if you have a financial planner ?
But you are asking if people can recommend you a planner
No he didn't.
@rektrading: There is a big jump between "Do you recommend having a financial planner?" and "Can you recommend a financial planner for me?"
Didn't realise ozbargain had an afsl
Isn't a Financial Planner like a stock market advisor advising you to buy a share regardless whether it is up or down?
No idea what they do :-)
No idea what they do
Financial planners/advisers take into consideration your current financial situation, your needs and objectives to design strategies and recommend products that will help you reach your financial goals.
They’re like the Fat Controller of personal finances.
https://education.rask.com.au/2020/01/09/what-does-a-financi…
Sell you life insurance and super..basically. :)
You obviously have never dealt with a professional financial adviser.
Ours has taken us from skint 20 years ago to a comfortable retirement and worth every single penny.
BTW, he has never tried to sell us life insurance (considers it a complete rip-off at our ages) and gives us continuous balanced advice on the various funds in which we have investments.
How about a bit of research before a flippant dismissal of how to maximise the money available to you in retirement?
@EightImmortals: Three years ago and have a very healthy super account, house paid off, new car, etc., plus he structured it so that we get a(small) part-pension plus health benefits.
Sorry to be so short with you, but he took two 40 year old people who had been divorced and had absolutely nothing and got us where we are today.
@ChrisLevo: Well done.
As I said, we saw a couple of them back in the day and all they wanted to do was sell us life insurance and super but I knew there had to be more useful ones out there somewhere. :)@EightImmortals: The problem is there's still many planners from the old days (and their "offspring" that learnt the same methods) mixed in with the newer generation that have actual technical training and uni degrees in finance.
The first wave were from the life insurance industry because the Govt needed an instant population of advisors to match with the new super laws at the time. Part of that deal involved said agents getting exemptions from technical quals to obtain a license.
The average planner paid a monthly software subscription to mobs like Asgard, did an annual meet with the client to talk about boats and holldays, the para-planner sat in the next room pressing buttons in said software and printing a half-ream doc to comply with regulations, then customer signs off on another year of commissions paid to the planner. Only the planners got wealthy.
Our FA advised us to cancel some of our policies as we have enough money to self insure.
unless you got serious money i doubt its worth it. afaik the costs vary, sometimes its a % sometimes a flat amount py. whatever the cost it eats into your gains and imo would be hard for it to outperform some of the larger ETFs without all the extra hassles.
i think it largely depends on how much money you have. if you are investing >$1million you might want a FA. me personally i dont see the need
Makes sense.. If we are on Ozbargain, mostly we are the mortal souls.
While it varies, I believe the current investment is about $4.5k. This is based on me receiving 2 quotes and also listening to a podcast which quoted the same figure. Obviously the planners want to retain you and so there is an annual retainer if you choose.
This guy has it spot on. The only advice you'll ever need:
- Pay down mortgage faster
- Invest in ETFs
- Don't ever borrow money to buy a car
- Don't use credit cards or take out personal loans
- Only borrow money to purchase appreciating assets
Essentially don't live beyond your means. A simple rule, if you can't buy five of an item in cash at a point in time, you can't afford to buy one.
Pay down mortgage fasterPaying off cheap credit is a lost opportunity cost.
But we love churning CC.
I think it's the people who are low to middle income that needs it the most. But most of the time will be priced out.
Low to mid you can educate yourself more than enough and save thousands, I'd say they specifically don't need it
Yeh interesting. I'd say the majority of my clients are everyday average Australians. Obviously some with a little more some a little less.
Also, I'd say many or most have the service not to specifically save thousands, but to outsource the decision making. They don't want to deal with it,and just want to live life with what they have.@mrtin: I respect your profession but for average people the comparison for me is this: You don't hire a private chef if you're middle-low income because it is "outsourcing decision making". You learn how to make a simple meal yourself and then just do it.
Same with finance. The bar to entry for learning it yourself is so low that you aren't helping yourself by outsourcing it.
@Scantu: I 100% agree with you personally, but also reckon mrtin is correct re "the multitude". I am willing to do my own research and make my own decisions, but everyone else I know would rather trust someone else.
TBH I think it comes down to my combination of stinginess and trust-issues.
If I used a financial planner I'd have to do even more research to verify that their ideas are better than mine.
% fee = stealing
Some people like to be robbed while sitting face to face listening to someone sell them 🐍 oil.
There are a few of them in this thread.
Are you after wealth or risk (insurance) advice?
My partner who's in a medical profession uses one for both due to complexities in the nature of requirements and benefits (tax etc).
I also used one for insurance after I hit above the 90k threshold re: PHI as it was quite new to me.
All these are one off charges, whereas generally wealth advice may have ongoing due to recurring advice.
I think similar to tax accountants, you get more value if you're in a field or situation where it's effective for you to outsource this rather than learning/doing all the nuances.
I did find that it was useful using it as a baseline and I'd imagine it can be useful to get a starting point and general direction/plan if you feel lost.Ok. How do you really know if you have the right one. My understanding is, each of them have their own strengths? With the royal commission report, many companies offlaoded their financial planners As they were making all sorts of decisions benefiting themselves rather than customers.
Financial planner and financial advisor aren't necessarily the same.
They are the same
The statement of advice (document detailing what they are recommending) now needs to disclose their commissions (if applicable).
You effectively need them to justify the cost of advice they are providing. Further, your first appointment/fact finding consultation should not be charged.You should ideally have an objective in mind before you commence. EG: are you looking to plan how much you will have at retirement considering x factors. You need to have quantifiable data so that any modelling is accurate and useful.
Example:
One of my friends is a teacher in VIC - her income is effectively set and progresses at set intervals and her benefits when it comes to paternity leave are very good (return to work etc). In her case, she had to find an adviser who had advised teachers before and knew the industry and their benefits and was able to also take her inputs to model.Yes and the benefits of Government Superannuation. I once had a preliminary meeting with a FA and he advised me to cash in my Public Serice Defined benefit and invest it in shares. Just showed he did not know what he was talking about as these schemes are like gold. I quote from George Cochrane fromThe Age.
I have often said that a government-guaranteed, Consumer Price Indexed, lifetime, reversionary pension, paying far more than the age pension, is a gift, allowing you to sit back and watch the coconuts fall.
It has been recorded that people receiving lifetime pension or annuities live longer than average, possibly because they have a lot less to worry about.
You paid someone to see if you should get PHI?
Moreso a comparison of products and offerings. There are certain requirements that I value more and I found it worthwhile.
My personal biased view is that if there is not a large differential between the tax you pay as a penalty vs supporting a crap PHI, I'd rather pay the tax and support the public health system. Unfortunately, this is only really viable to a certain degree.
I'd rather pay the tax and support the public health system
Unfortunately that tax you pay is not ring fenced by the government to use on the public health system. Probably actually used for tax rebates like free utes for tradies etc
No.
Paying $1,000s pa when they can't beat the market is a waste of money.
Financial planners don't help you beat anything.
They help you to achieve goals, if that involves budgeting how much you invest or withdraw over a period of time
Just to piggy back on this, it's about strategy. That could mean throw it all in super, or buy an investment property or eft + super. They run each scenario and that tells you what will be more beneficial for your circumstances.
Ring up a financial adviser.
Use Google financial adviser reviews.
Use google to find a few financial advisers near you and have a look at their web site to see how many of your questions are on their web site.
Do you recommend having a financial planner?
It depends on a range of factors, including your personal interest in/ability to make your investment decisions, the amount of money you have to invest, and a range of other personal circumstances.
I am interested but unsure about the cost?
This is a not a "fixed fee" affair. It depends partly on the first point above, partly on the cost structure/service offering of a specific adviser/licensee, and partly on what it is you are looking to the adviser to do for you.
I googled around, and how do you find a good one?
Personal recommendation is always the best approach.
What is the cost involved?
See above, but as a general rule you need to set your expectations in the thousands (possibly two, possibly ten), not in the hundreds to have a comprehensive "statement of advice" prepared.
Are they worth it?
See the first point above, but understand what a financial adviser is and isn't.
A financial adviser will assist you to understand your risk appetite and guide you on the asset classes you should be invested in. They will assist in arranging insurance products to suit your needs. They will advise you on various strategies available around superannuation (and other investment vehicles) you can use to minimise tax and build your retirement income pool. They will monitor your investments over time and work with you to understand your cash flow to construct an overall plan suited to your income, expenditure, and risk profile.
A financial adviser is not a fortune teller that is able to forecast exactly what will happen to the value of your assets over time. They will not stop you from losing money, particularly over the short term as asset values move up and down. They will not "pick the best" investment for you, but will rather suggest your investment in a range of investment grade options. They will not (or at the very least should not) "guarantee" any investment returns/performance (as they simply can't). They are not a "short cut" to getting rich, but may help you to attain your financial goals if you lack the knowledge, skills, and confidence to do it yourself.
I don't like saying this but after reading that I would just DCA in a high-performance ETF.
In all honesty, dropping $x a week into a single, but diversified ETF that fits your risk profile is not the best, but not the worst investment strategy going around.
There's obvioulsy a hell of a lot more to it than that, but if it it was a choice between that and simply "saving money in the bank forever", I'd choose the ETF every time.
Some banks provide a free first consultation. Can have a chat with them first and suss them out a bit. I don't have one, don't see the need for it personally.
Thank you
If youre looking for a financial advisor the bank is the wrong place to be looking. In fact any advisor that receives a commission from a financial institution is not the right person.
Commissions were basically banned in 2014
AFAIK the bank consultants are limited to selling products from their employer.
I would extend that to employees of super funds. There's o ly one product they are going to recommend.
Unisuper have financial advisers and they don't just recommend their own products. You pay them by the hour a flat rate, and they work for you.
@Jackson: I'd be interested in the number of times the super fund recommended was a non uni super product. I'm guessing not many. Rkn they'll recommend say host plus, or Australian super, or bt, or netwealth? It's vertically integrated.
Also they get bonuses on achieving targets which include billable hours / revenue targets. To work out conflicts you just need to follow the money trail.@mrtin: You would be an idiot to go with a non-uni super product, because the uni pays you 17% super if you go with them, if you don't you go back to the usual rate
@Jackson: General comments like these can be dangerous and misleading to the unassuming person as each client is different.
Whether you get higher contributions like 17% depends on what arrangements you have with your employer and which product within unisuper you have (multiple available).
My point was more about the product recommendation. if I sought advice from unisuper adviser , which product would I be recommended? I'd bet unisuper. If you were retiring and wanted an income stream? Unisuper. If you look at 100 financial plans, how many would unisuper be the product recommended? That's what I am curious about.
It is a vertically integrated model,which is in my opinion is conflicted. They become a product distribution and or retention team for their employer unisuper.@mrtin: Not sure if it was clear but unisuper was set up as the industry super fund for universities in Australia, and the recommendation was precisely for their employees. Anyone who's working at any one of the Australian unis that I have ever come across, who's got more than a 1 year contract, is eligible for 17% super through unisuper. Beyond that, people can do whatever they want. Uni employees would be stark raving mad not to be with them. They are also extremely careful not to give you financial advice, and are very clear with their constant disclaimers, which they repeat ad nauseum. Also to my knowledge it doesn't matter what product you have with them because the 17% super is stipulated in the EBA and is a condition of your contract.
Beyond that, their advices is full fee at 310/hour, and they will advise you on anything. In some cases they will advise you that you seem to have your shit together and there isn't much they can do. They don't have that many products apart from super, advice, insurance and some retirement planning, so not sure what they are going to sell you, since most advisers tell you to get on an ETF or property, but that's based on what the client wants and they don't offer those products. Feel free to let me know which product provides a conflict of interest.
@Jackson: Unisuper is open for anyone.
UniSuper and any product distributor who has a financial planning arm is a vertically integrated model. The most common product recommendation I believe would be the employees product. Regardless of what you have, most product recommendations I guess will go into the employers product. This is the product they are selling. This to me, is conflicted. You might think otherwise. But this is my opinion.
Would it be the Same product advice if they were totally seperate from unisuper?
Happy to discuss via PM as well, to not clog up the system. Sorry to everyone else hope you are finding this interesting.@mrtin: I get your issue, and I agree with you on the inherent risks of vertical integration, but what I am saying is that they don't have a conflicting product. Look them up, they provide super to a group of people who are bound to go with them, and then only insurance and advice. So theres nothing really for them to recommend. Sure anyone else can go with unisuper, but that's neither here nor there. Everyone is best off going with an industry super fund, and uni super is consistently a top performer.
Do not see a FA affiliated with a bank. They work for the bank, not you.
I think Westpac is the only bank that has retained a Financial Planning arm, the rest have all gotten out.
It's not surprising that the other banks have exited the industry. It's pretty difficult to make money without scamming people.
Westpac still offering dodgy services is also no surprise.
🥇 scammer of 2020.
Westpac's record $1.3 billion AUSTRAC money laundering fine explained
By business reporter Michael Janda
Posted Thu 24 Sep 2020 at 1:06pm
https://www.abc.net.au/news/2020-09-24/westpac-money-launder…
There is a podcast called "Australian Finance Podcast" and an episode called "when and where to get financial advice (key questions to ask) that may assist you OP, they interview a financial advisor in this episode and talk costs. It's been a few months since I listened to it but I think it averaged about 2k-4k.
Thanks mate. This is very helpful. I am going to listen soon.
It's a good podcast in general too.
Financial planners are basically people who advise the financially illiterate.
They push you into investing money that otherwise would be sitting in an account accumulating close to 0 interest.
They are also abit of a catch 22, cause its like that saying goes, those that cant, teach.
So any financial planner worth their salt wouldn't waste their time financially planning, they would be using their time to build their own wealth through investing for themselves.It is possible to do both. I deal with financial planners who do what they advise in their own lives. And I would also argue that financial advice is more than where to invest. It can include information around superannuation, life insurance, Centrelink entitlements, pensions, retirement, wealth accumulation and transfer and estate planning.
Fair point but you can chew gum and walk at the same time.
I’ve used a couple a few years ago. It was good to get an actual picture of our finances, and some growth opportunities. Only reason I used one of them was because it came with my tax accountant.
The other was a number savant. Like, this guy could work out sums in his head like nothing I’ve ever seen before. He was fantastic at dumbing down finance speak. He’s since retired, but still keep in touch a few times a year
Good to hear some positive stories here.
I'm surprised on the number of good stories in this thread.
I mean. Don't they just try and sell you income protection insurance policies, look into refinancing your mortgages then just guess where you should stick your cash - ie. into their pocket or ETF's crypto, shares, etc etc?
From Royal Commission story, I heard that they were mostly selling products that gave good commission or to their masters. In a true sense, they are supposed to be helping the clients to achieve their goals/objectives IMHO. But you are right, they used to sell Insurance policies or park your money somewhere that has benefited them.
Keep in mind it was a Royal Commission into MISCONDUCT in the Banking, Superannuation and Financial Services Industry and so it was not looking for good news stories, and the use of commissions ended before the Commission started (except for life insurance).
Additionally, much of the behaviour took place under the oversight of CBA, NAB, ANZ, Westpac and AMP who owned financial planning businesses alongside life insurance and investment businesses and cross promoted products between those businesses.
They have since left the advice field but I would recommend seeing an adviser/planner not tied to any institution, including a super fund!Thank you. Looks like most Ozbargainers are recommending to stay away from the FPs who are not tied to institution. This is a good advice.
I pay for ozbargain premium for all my financial advice.
LoL
Financial planners are there to remove your money.
There is a massive scam sector in Australia dedicated to removing idiots money while claiming to have secret information. They get the information by taking an open book test that has no limit on the number of times you can take it. After studying part time for three months.
LoL. I didn't know this. They sound similar to Property managers
If it were true, it probably would be.
Financial planners are required to have (at least) a 3 year bachelor's degree, and then additional study requirements apply based on the field they'll be working in:
https://asic.gov.au/for-finance-professionals/afs-licensees/…Thanks for sharing. Skimmed through it quickly, and on a lighter note, It looks more like passing the compliance training in large companies
@chrismatt: Agreed, though the requirement to do at least 40 hours CPD study a year as well is a bit above-and-beyond what a company would require.
And they also need thick skins when the moron conspiracy theorists post rubbish!
@diji1 can you please comment on this in relation to your initial claim?
Not anymore.Since the start of 2019 new advisers have to hold traing at a degree level and pass a mandatory exam before being able to offer advice and existing advisers have until 2026 to meet the standard. (https://fas.treasury.gov.au/who-am-i/new-entrant and https://fas.treasury.gov.au/who-am-i/existing-advisers)
Not all of them are going to make it and around 7000 out of 25000 have left the industry either because they don't have the skills to meet the new standard or are too old to worry meeting a new standard close to retirement.
I used one to find insurance from me
Depends what you need help with. You don't go to a financial planner for fun.
Would you pay a plumber to come around to your house for no reason? At worst they'll create more work for themselves, tell you to replace pipes that don't need fixing and charge you for it. But mostly they'd rock up and go "so what do you want me to do?"
Financial planning is the same. What are you trying to do? Structure something? Increase earnings/decrease risk? Looking at insurances? How to reach a specific financial goal? Budget better? Do you just need someone to sit down and explain to you where all your money goes?
If you don't know then likely you don't need one.
I'm tempted to engage a financial planner solely on insurance setups as I've discovered you neeed them to access the retail insurance market. Keen to find not a generalist but someone who's savvy to construct a 4 way insurance setup (death, tpd , trauma and income protection) that's financially savvy and strong. Any recommendations?
WA based but happy with the new age ones that do it anywhere around country. Main thing is it's tailored and we'll constructed than a spot you out the machine with default solutions everyone gets. I'm sure there's some specialists out there but besides Skye wealth I haven't seen any other recommendations ? Didn't want a generalist financial planner throwing some insurance suggestions.
Wow. There are a lot of people on this site who know nothing about financial planners.
A financial planner looks at your whole financial situation including insurances, wills, investments, assets, income, life and financial objectives, risk profile etc and then comes up with a plan to help you achieve your goal. An initial plan will cost a few thousand dollars. You can also ask them to review your situation a few years later to provide followup advice. This will also be at a cost. Financial planning is complex, requires a lot of training, is highly regulated by government and so is not cheap.
However make sure that you go to an independent financial planner, not one associated with a bank or insurance company as they may recommend products from those companies. Also try to look for a planner who will be upfront about the fees. Ongoing fees (based on a percentage of your funds each year) should be avoided.
The Australian newspaper produces a list of the best financial planners each year. That might be a good place to start looking for one in your area. I suspect that Choice magazine has also done an article or two on this. Then there is lots of advice on the internet.
I used financial planners and I retired early.
Thanks so much for the thoughtful reply. This is very useful. Especially I liked the part about the ongoing fees, and the going with one who is not connected to a bank or a specific institution.
@hearthstone's link is a good resource to see if your adviser is legit and if they have got into trouble and when.
If someone claims to be an adviser and they are not on it - ask for more info, and if they are on it and banned - keep well away!
@blindwilly: Scroll down further you can see they have a bit more info
Choosing a financial adviser
Find an adviser that suits you and your goals3 MIN READ
Working with a financial adviser
Making a plan that helps you reach your financial goals4 MIN READ
Financial advice costs
Pay the right price for the right financial advice4 MIN READ
Problems with a financial adviser
Steps to take if you're unhappy with your adviser or their advice3 MIN READ
Financial planners are on the same standing as chiropractors…. If you do come across one, as them how their own portfolio is going and if they’re successful why are they still working. Just use common sense 101….don’t spend more than what you earn, live within your means, wait and save for something than buying on credit. If the returns are too good to be true, then it’s a scam.
Makes sense. May be they are working to help others? or passionate about it? I didn't understand Chiropractors analogy though :-)
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wow, you have provided so much information regarding your financial circumstances so that ozbargain can provide suitable advice