Financial planners; who needs ‘em?

July 11, 2016

When we hear the words ‘financial planner’ or ‘financial adviser’ our first impression is often the idea of someone who provides investment advice – what shares to buy, whether to invest in property, and which term deposits offer the best yield.

In some cases; investment advice might extend to exotic investments including bullion and precious metals, foreign exchange, and derivatives.

Investing can certainly be very complex and, for most people, the assistance from a financial planner to help build a robust investment portfolio can be extremely useful when navigating an investment minefield. And when it comes to insurance, the most appropriate type of policy and levels of cover become a science of its own.

However – financial advice is much more than simply designing and managing a portfolio of investments.

The impacts of tax, superannuation, social security, insurance, aged care, and estate planning can all have significant implications in a planner/client relationship.

These are all very complex areas and, while many of us are not exposed to all of them, we are all touched by at least one or two at some stage in our lives.

Even the best-intended ‘layperson’ is not going to have a good working knowledge of the inner-working and nuances of each of these areas. Moreover; getting it wrong can have some very dire consequences.

Hardly a week goes by without Tealey or I hearing about a situation where a person has taken a course of action, often without taking advice, which results in a very unsatisfactory outcome. Often these actions can have consequences from a tax, superannuation, or social security perspective.

For example – a retiree couple might be very comfortable with the level of income they are receiving from the age pension and a superannuation pension. However they become aware that they are about to receive an inheritance. While this will be nice, for many people it is an inconvenience, particularly when it can result in a loss of all, or a part, of someone’s age pension. Therefore – to get around the inconvenience – they simply ask the executor to pay the bequest to their children.

Unfortunately – foregoing an inheritance does not avoid the social security consequences. In fact; it will often result in the foregone inheritance being assessed under the Centrelink gifting as ‘deprivation provisions’.

A good financial planner is far more than someone who puts together an investment portfolio. Sure, that is a very important part of it, but what is often overlooked is the role a financial planner plays in providing strategic advice on a very broad range of complex issues.

While the temptation is always there to want to ‘do it ourselves’, there are some things best left to the experts.

Talk to your financial planner and find out where their specialist skills lie. Get to know them and, if ever in doubt, do not hesitate to ask for their advice. One simple phone call or email could end up saving your tens of thousands of dollars you may have lost because of the consequences of a wrong decision.

Blog Authors

Mark Teale

Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.

Peter Kelly

PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.

Financial planners; who needs ‘em?