23/08/2017
What’s the difference between a good financial planner and a poor one? And how do you choose a good one?
To answer this question it’s important to first understand what a financial planner does and how they do it. In simple terms a financial planner can help you with the following:
•How to invest and what to invest in
•Protect you as best they can when things don’t go so well for you financially e.g. if you have an accident and can’t pay your bills
•Help you to save for things that you want to spend your money on such as holidays, cars and a home, while at the same time making sure you’re not living like a pauper and enjoying your life somewhat. You know on things like lunches with friends or a bit of shopping.
•Help you to retire comfortably and hopefully not have to rely on the age pension…because retiring on the age pension does not mean retiring comfortably, it means surviving and living a very meagre lifestyle.
So how does a financial planner go about doing the above. It’s actually not that complicated. They basically gather a whole lot of information about you which include things such as:
•Life goals,
•Contact details
•Hobbies
•Health
•Income
•Assets (What you own)
•Loans (What you owe)
•How much super you have
•What type insurance policies you hold
•What your view is on various types investments
•What you want to spend your money on
•Who you want your money to go to if something should happen to you or if you can’t make decisions who will look after you and how they will look after you.
The above is a basic list but you’re probably getting the picture.
Once they have that information they proceed to put together plan of action for you to achieve your life goals.
So this is where it gets a little more difficult…the picking of the right financial planner. All financial planners are not created equal. Firstly, there are different levels of qualifications however, in my opinion, this is actually not the most important determinant of a good financial planner. There are many financial planners that have achieved a diploma in financial planning and have done no further study but have gone on to amass a huge amount of expertise beyond their initial qualifications.
So what is it that makes a good financial planner?
In my opinion there are a number of important characteristics that make a good financial planner and these are as follows:
•Obviously, they must be qualified otherwise they can’t give advice in the first place
•They must have a sound knowledge of the Australian tax system and how the tax system impacts their recommendations to you. The wrong recommendation can impact you dramatically in terms of how much tax you can end up paying. Not all financial planners may have enough or any experience in this area.
•They must understand the financial products they recommend to you and whether those financial products suitable to recommend to you
•They must disclose their fees to you
•They must explain why their recommendations are suitable and in your best interest
•And finally the most important thing which, is more important than any of the above in my opinion, is that they understand you and use their skills and expertise to create a plan that you can actually stick to. There’s no point in designing this fantastically complex plan that you aren’t going to follow…it just won’t work. Part of this process is also making you comfortable in the knowledge that you can trust the financial planner.
So how do you find these good financial planners?
Well unfortunately it’s a bit of a suck and see approach or you can just contact me at [email protected] or visit our website at laikagroup.com.au and make an enquiry. If we can’t help you, at least we can point you in the right direction.
