Kochie’s Financial Planning Tips
David Koch - Kochie’s Business Builders
Good financial advice is one of the best investments you will ever make. It’s a tax effective asset that will always be part of your portfolio and, with good application, will pay dividends for years to come. On the other hand, poor financial advice can end up costing a mint.
So, how do you pick a winner in the advisory stakes?
It’s actually a lot like hiring an employee or doing background research on a business: you need to be comfortable with them, check their track record and qualifications. Here’s how to get started.
Cast the net out
The first thing to do is find a pool of advisers to pick from. Professional associations, friends’ referrals and local area searches are a great starting point. To cut the fat early, map out the areas you need advice on and ensure each of the advisers and associations you search are specialists, or at least experienced, in those areas.
A share broker won’t provide the best property advice, just like a mortgage specialist isn’t the go-to for tax planning. Within each field there are specialists for different occupations, age brackets and financial positions, so find the best broad fit.
Then, from that pool of potential advisers, it’s time to trim the fat.
Do some background work
The power of the internet as a research and review tool is amazing, and very easy to harness. Just like you’d dig around on management before investing in a listed company, the same applies for an adviser.
Check the website, call the firm for some initial information and peruse search engine results.
Here you’ll be able to gleam any positive press, professional accolades and qualifications they’ve achieved. And, if there is anything shady about the adviser, it’ll usually surface pretty quickly through a bit of background research.
Each firm has a financial services guide that sets out the services they offer, fee structure and complaint resolution process, so download or ask for this to be provided as part of your research.
Also, dig into what their professional qualifications. Any good institution will hold its members to strict ethical and professional conduct, as well as ongoing industry education. At the bare minimum, they must hold an Australian Financial Services license.
Once you have a few reputable specialists with the right qualifications, it’s time to have a chat. Go to www.adviserratings.com.au which is like the TripAdviser for financial planners where customers review their adviser.
One of the most important parts of good financial advice is being comfortable in the relationship.
There should be no intimidation, condescending communication or misunderstandings. They are there to improve your financial position, so it should be a very positive, comfortable and trusting relationship. If there’s any uncertainty, it’s worth asking for testimonials from a couple of past and present clients.
And as the first meeting with an adviser is usually free, you have the opportunity to talk to a few on the shortlist to find the best fit.
Confirm the fine points
So the list of potentials has been trimmed. It’s time to talk fees and products.
There are a range of ways advice is charged, from annual retainers to one-off plan preparation fees to a percentage charge on invested assets. Whatever the case, the fee structure needs to be transparent and fair.
Within that, there might be limitations on what products the adviser can recommend, so ask about any restrictions or incentives and move on if you feel they’re too limited. There has been a lot of regulation in recent times to stamp out dodgy practices, but the question still must be asked.
And just on that point, no adviser in any field anywhere should recommend a product or course of action without making a full assessment of your goals, risks, timeframe and circumstances. If they try to push you into something without being fully informed, alarm bells should ring.
Make the call
By going through this comprehensive research and selection process, you’ll give yourself the best chance of choosing an adviser that will provide a long-lasting, wealth building relationship.
However, if down the track it stops working, circumstances change or the results aren’t there, don’t be afraid to go back to the start the process again. It’s a small amount of time to put into one of the best investments you will ever make.