For those who have never engaged the services of a financial adviser it can be difficult to understand how an adviser can deliver valuable advice, year in, year out.
Simply, financial advice is much more than picking a managed fund or recommending a superannuation investment. Financial advice is about delivering overall value to the client – both in terms of financial and non-financial return.
To understand how an adviser can add value, it is helpful to understand a few things financial advisers can do for their clients.
Knowledge and Experience
One of the biggest advantages of using a financial adviser is the knowledge and experience you can draw upon to make financial decisions. Financial advisers are specialists in a wide variety of financial matters, including investments, superannuation, insurances and estate planning.
But just as important, they are experienced in guiding clients through complex decisions, hard times and periods of uncertainty.
For example, they ensure their clients don’t make silly decisions, like panicking and moving all their super to cash, every time the share markets crash. They do this by helping their clients understand themselves better and make the right decisions for themselves. A great financial adviser educates as well as advises.
Choosing the right investments
A financial adviser can help you in picking the right investment. But, what is the right investment?
The right investment is one that suits your risk tolerance, your timeframe, your previous investing history and your end goal.
Because investing can be both an exciting and scary venture it helps to have a professional guide you through the process. An adviser can be invaluable when they guide you through market corrections or periods of uncertainty. They can educate you on the different asset classes and how these perform through different economic cycles. They make sure you are not taking unnecessary risks to achieve your goals.
They can give you confidence to invest in assets you may not have considered before, because you lacked knowledge (and confidence) in picking the right investment.
Superannuation can be a very complicated area and without a solid understanding of how super works, it can be both an extremely time consuming and administrative process. Financial advisers help you through this process by keeping up to date with changes in legislation and providing a team who can assist in all of your superannuation matters.
A great advice team can remove the confusion from super and explain it to you in a simple manner. Even better, they can manage all of your paperwork and save the amount of time you spend chasing up super funds.
Finding the right insurance policy for you
Like super, insurances can be quite complicated and the paperwork involved in implementing a quality insurance plan can run into many, many hours. Financial advisers spend a lot of time researching and reading insurance Product Disclosure Statements – the long document that outlines what the policy will and will not payout for – so they can provide advice that is relevant and appropriate for you.
Now, you might be thinking “I don’t need help finding the right policy as they are all the same. So just give me the cheapest policy, and I’ll be fine.”
Unfortunately, you would be wrong!
There can be many differences between the benefits and features provided by each insurance company and this makes it vital that you get the policy that best matches your needs.
For example, if you are single with no dependants then life insurance probably isn’t essential for you, but a disability insurance policy is probably going to be appropriate.
Perhaps you have a family history of cancer -if so you would want to get the policy that has the Best cancer definitions.
Probably more importantly though, financial advisers have firsthand experience dealing with the insurance companies they recommend. This includes the claim – which can be both a confusing and stressful process for those who are not accustomed to dealing with insurance companies on a regular basis.
Retirement planning varies from client to client. No two people have the same idea of what makes a great retirement, when the best time to retire is and how to manage their finances once they stop working.
This is where a financial adviser’s experience is highly beneficial.
While a good financial adviser can get the right superannuation structure in place and maximise Centrelink benefits etc., a Great financial adviser works with their client to transition into retirement and then guides them through the retirement years, ultimately assisting them in the transition into aged care .
People all react differently to retirement – after all retirement is effectively the cessation of full-time gainful employment and this leaves a substantial amount of spare time in one’s week.
Because of an adviser’s experience in helping clients make the financial adjustment to retirement, it is not uncommon for them to discuss the non-financial aspects of retirement as well.
Considerations such as what a client plans to actually do in retirement, the type of lifestyle they wish to live in retirement and what they want to happen to their estate on their passing are all common conversations that are had with a financial adviser.
Planning for Beyond Retirement
An often-missed consideration of how an adviser can add value is the advice they deliver in relation to estate planning. Being a sensitive matter, estate planning can often fall by the wayside. However, as part of the advice a financial adviser delivers, estate planning is a subject matter that is often brought to the attention of the client.
An experienced adviser is able to raise potentially difficult issues and help the client determine what they would like to happen to their estate, such as who is the most appropriate person/s to appoint as executor. They can also help you in talking through your wishes with other family members/beneficiaries.
Why seek advice from a Financial Adviser?
Financial advice is more than picking the right shares or recommending an insurer. It is about finding the right financial path for clients and delivering that through a financial plan.
A great adviser shares their knowledge and experience with their clients, so that they don’t have to learn by making mistakes themselves. A great adviser provides more than a financial return, they also add a non-financial return by being a sounding board to the client and allowing the client to make educated decisions for themselves.
This is the value of advice from a financial adviser.