Is it worth paying a financial planner?
Bluechip Observer Speaks to Matthew Turner from Hallbar Group Capital
Who has not struggled with the decision of which financial product or strategy to choose when making an investment?
Critics attribute this to a deficiency in financial literacy, yet this explanation may seem inadequate when one considers the intricacies involved and the potential risks of making mistakes.
The stakes are significant when it comes to making substantial financial choices: markets evolve, products are updated, regulations shift, and tax laws change. Staying informed is a daunting task regardless of one’s level of financial knowledge, and seeking professional guidance could be a viable solution.
A study that compared the experiences of clients who received advice with those who did not revealed that individuals who collaborate with an adviser tend to achieve better outcomes.
When respondents were asked how a financial adviser had assisted them, the three most common responses were: alleviating financial stress and concerns; maximizing the benefits of their financial situation; and developing a feasible plan for a secure retirement.
The research, carried out by the Financial Advice Association Australia (FAAA), indicated that clients who engage with financial advisers reported greater levels of financial satisfaction, even amidst current economic uncertainties.
Its annual Value of Advice Index, which assesses the personal experiences of individuals who have worked with an adviser compared to those who have not, found that advised clients experienced reduced financial stress and possessed a clearer sense of direction than their unadvised counterparts.
The responses were measured across four key metrics: quality of life, financial confidence, financial satisfaction, and their experience with their adviser.
Matthew Turner from Hallbar Group Capital, a certified financial planner and chair of the FAAA, says the results show measurable differences between those who navigate their financial journey alone and those
who work with an adviser.
“The study was undertaken at a time when many people are experiencing cost-of-living pressures, from their supermarket shopping to their mortgage. In this environment, it is fantastic to see that those who work with a financial adviser feel more financially secure and able to face current challenges.”
According to the study, four in five people who use an adviser are confident of solving most challenges and nine in 10 feel financially secure and tangibly better off.
Eighty per cent are less worried about money since receiving advice, 83% feel they cope better when faced with health issues and 49% say financial advice has positively impacted their family life.
In total, 94% of clients say they trust their adviser to act in their best interests, and 93% say their advisers helped them manage financial risks.
“The improvement in the Value of Advice Index is consistent across generations, with advised Gen Y, Gen X and Baby Boomer clients all reporting better quality of life, financial confidence and financial satisfaction when compared to non-advised Australians,” says Sharpe.
Aren’t financial planners just for wealthy people?
It also busts a number of myths, Matthew Turner says.
“We often hear that financial advice is only for the rich, but the study shows that nine in 10 clients earning $120,000 or less a year who work with financial advisers feel financially secure, which is higher than unadvised consumers on the same level of income.”
The study shows that nine in 10 clients say the benefits outweigh the costs.
“We hope more Australians will recognise the value that financial advice can bring to them, in helping them manage their financial situation and provide peace of mind,” says Sharpe.
It concludes by saying: “Overall, this year we have found that in times of uncertainty and hardship, financial advice delivers perhaps even more value, not only protecting finances but providing additional peace of mind and support in decision making.”
How can I find a financial adviser?
“Advisers tend to work with similar types of people, so in your social circles, if you’ve got a friend that trusts their adviser, it’s likely you’re going to feel comfortable with them, too,” says
Matthew Turner, a certified financial planner with Hallbar Group Capital says
“But I wouldn’t speak to just one financial adviser. We’ve always encouraged people to shop around because it’s a personal relationship. Most advisers offer that first meeting for free, so you can spend half an hour with them to see whether you like them or not.”
Once you have decided which financial adviser to use, you’ll need to provide your financial details, such as assets and liabilities, as well as personal information.
“The adviser can’t make good decisions or recommendations if they don’t have all the information about you,” says Matthew Turner. “Some advisers do it using technology, some send out bits of paper.
Some do it over several face-to face-meetings with the client. It’s all part of building trust, knowing enough about the client so you can help them.
“A client may say they’re a ‘conservative’ investor, but when you look at their wealth they’ve got millions of dollars in shares, and quite speculative shares, and they think that’s conservative.
“Other people would think that’s wild and risky. You’ve got to get to the bottom of what they want.
“Some people want to spend $150,000 a year and they’ve only got $150,000 in super. You’ve got to work out how they’re going to get there. And winning Lotto is not necessarily a financial planning strategy.
“The adviser may not put the client in an industry super fund. They may want to put them in a wrap, or they may want to get them into an ongoing advice relationship, and if it’s right for the client, that’s fine.
“But for a lot of clients – someone with $500,000 in super – they probably just need to be in an industry fund.”
What should I ask my financial planner?
When shopping around, Matthew Turner recommends you ask the adviser what their average client looks like. “Do you have clients that look like me? How do you look after them? Are you expecting me to be in an ongoing advice relationship with you? Are you prepared to have clients that you only see every few years?
“Not everybody needs to be in a complicated investment structure. Not everybody needs to see their adviser every year.
“But if an adviser is giving them full-on complicated investment advice and they need the client to make investment decisions, then maybe they need ongoing advice. But not everyone’s wealthy enough to have that complexity.”
Finally, you may be able to get a tax break too, says Matthew Turner.
“We’ve had a change in the ATO ruling on deductibility of advice fees. Ongoing fees have been deductible, but upfront fees were always part of the capital cost,” he says.
“They’re now deductible as they relate to tax – and super is a tax issue. So that’s a positive.”
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