Financial planners are just for the rich, right?
Well no, actually, a financial planner can help if you’re struggling with your budget, are keen to start investing but don’t know where to start, or you want help preparing financially for retirement.
The term financial planner is used interchangeably in Australia with financial adviser and each has an area of speciality such as cash flow and savings, investing or aged care.
An accountant may also be authorised to give financial planning advice, but their speciality is tax.
Financial Planning Association of Australia chair Marisa Broome said a financial planner can help with your budgeting and saving strategy, as well as with questions such as how much money you should put into superannuation versus paying off your mortgage.
They can also help you figure out where to put your money as you near retirement, how much superannuation you will need, and whether you should stay in your house or downsize.
“A lot of people think they need to be rich to see a financial planner and that all a financial planner does is investment advice,” Ms Broome said.
“It’s much more than that. It’s actually about the strategy and setting the goals and … what you need to do each year to achieve those goals.”
So, how much does it cost?
Fees obviously vary from planner to planner depending on their business model and expertise but, as a rough guide, a detailed financial plan for someone close to or at retirement costs about $3000.
Ms Broome said the return on investment becomes clear in the long term, but sometimes the benefits are more immediate.
“(With) people who are spending more than they earn, you might actually see really big changes in year one for someone like that after you’ve taught them how to change their money behaviours.”
What is the process?
You have an initial consultation with a financial planner that can range from about 15 minutes to an hour to help you decide if you want to work with them.
This conversation is billed in some cases and free in others, depending on the planner.
Ms Broome said the financial planner should then give you a letter of engagement that will detail exactly what the process is and the costs involved if you decide to go ahead.
It’s important to ask whether implementation of their advice is included in the initial cost or whether that will be charged separately.
Ms Broome said it was also wise to clarify their area of expertise and the profile of their average client.
How do I find a financial planner near me?
Recommendations from family or friends is a good place to start and you can also use the ‘find a planner’ tool on the FPA website, where you can search by postcode.
What professional standards must they have met?
A financial planner must have an Australian Financial Services licence and have passed the Financial Adviser Exam (set by the Financial Adviser Standards and Ethics Authority) by the end of this year.