Financial Planning - More Affordable Than You Think!
17/02/2015 by Nathisha Paramasivam, Associate Financial Planner and Authorised Representative
As a Financial Planner at The Hopkins Group, I get asked all the time by friends and family whether financial planning is really only helping the “wealthy get wealthier;” however that couldn’t be further from the truth. Financial planning is a lot more affordable than you may think.
The clients I service vary greatly in terms of age, financial position and long term goals. I have relatively young clients who are working towards purchasing their first home or investment property, clearing personal debt (credit cards and car loans), getting appropriate life insurance in place or simply cleaning up and consolidating their superannuation funds. I also see more mature age clients who are looking to finally pay off their mortgage and start thinking more seriously about their superannuation and personal investments. Finally, I see clients who you may refer to as the lucky ones; nearing retirement age and looking at getting advice on how to settle into the good life whilst winding back their investments.
Regardless of which scenario a client fits into, the main message to take away is that financial planning is not only affordable but also essential for your financial wellbeing; both now and in the future. A professional and experienced Financial Adviser can assist you in achieving your financial goals whilst ensuring out of pocket expenses are kept to a minimum. When it comes to financial advice, remember that quality advice is always worth paying.
How does the financial planning process work?
Given financial planning is now heavily regulated by government and industry guidelines (to ensure the client is receiving the best possible service and advice at the most appropriate cost), most reputable Financial Advisers approach client service in a similar manner. Here, I will outline a typical process of meeting with a Financial Adviser and what a common service offering would look like.
1. First Appointment:
Your first meeting with a Financial Adviser is really just a meet and greet. They will tell you a little bit about themselves; who licenses them as an Authorised Representative, what their specialty is and what services and departments their company offers.
Here, you will get a feel for your Financial Adviser; their personality, skills and professionalism. This will assist you in determining whether or not you feel comfortable seeking advice from them and sharing your financial objectives. It’s important your potential working relationship with your Financial Adviser is a positive one, ideally built on trust and confidence, as you will hopefully both be working together with common goals for years to come.
At this first appointment, your Financial Adviser will ask you various questions with regard to your current and projected personal and financial position to ascertain where they can assist. If your Financial Adviser works for a “holistically structured” company (i.e. a company with a complete suite of financial services such as The Hopkins Group, which offer financial planning, mortgage and finance, accounting, overseas pension and property investment) they will determine whether you would benefit from seeking additional advice from other specialist advisers within the business to assist in meeting your financial goals.
Towards the end of your first appointment, your Financial Adviser will give you an indication at to whether or not there is value in you moving forward in the financial planning process. At this stage, you should have an idea of whether your Financial Adviser is best suited to your needs.
At the The Hopkins Group, your first appointment with a Financial Adviser is complimentary and obligation free.
2. Research Time:
Depending on the complexity of your personal and financial situation, you may or may not be invited back to see your Financial Adviser for a second appointment in order to gather more information.
You Financial Adviser will raise any concerns they may have and will advise you as to the time frame they will need in order to appropriately research your specific circumstances.
Research may include calling your existing superannuation fund (with your permission) to get an update on fees, performance and insurance. They may speak with an in-house (or external) Mortgage Adviser to discuss strategies such as refinancing an existing mortgage, trying to secure a better interest rate, equity position and borrowing capacity.
Were appropriate, your Financial Adviser may also liaise with an in-house (or external) Accountant to discuss any potential tax or accounting issues or strategies which may assist in any way. If you’re will and estate planning hasn’t been prepared, they may chat with a Solicitor and work out costs involved to have a legal will drawn up.
With all the appropriate information then in place, your Financial Adviser will (usually with the assistance of a Paraplannner) draft a formal document of their advice, which is called a “Statement of Advice” (SoA).
3. The Statements of Advice (SoA):
With all the facts in hand, your Financial Adviser will then make his/her recommendations that will be specific to you.
Your SoA will outline your goals, objectives and current financial situation, so it is important you have provided accurate information prior to the SoA being completed. The SoA will clearly outline your financial strategy, what investments (if any) are recommended and the proposed service proposition. The SoA will highlight both the benefits and disadvantages of every recommendation. The document will also include information on all the fees and costs associated with becoming a client and implementing any recommendations.
If you are happy with the recommendations and service offering in your SoA, you will then sign a document (authority) which allows your Financial Adviser to proceed.
Industry guidelines advise there are two ways of paying for financial advice;
- Fee-For-Service as an Asset Based Fee
In this instance, a fee for service is agreed between you and your Financial Adviser. This fee for advice is charged as a percentage of your funds under management and can either be paid directly from you or deducted from your investment.
- Fee-For-Service for Advice
In this instance, a fee for advice is charged on an hourly or monthly or annual rate. This would be a fixed flat fee for the service and advice you would receive from your Financial Adviser. This fee could either be paid directly from you or deducted from your investment.
At The Hopkins Group, you will not be charged a fee for any time spent until it is in writing in your SoA.
As a Financial Adviser, I will often try to keep ongoing fees and costs for advice for my clients made payable out of my clients superannuation fund (depending on their individual circumstances). This strategy is beneficial as:
- It keeps out of pocket expenses to minimum so usual expenses don’t change. This means the client can continue focusing on paying of their mortgage or putting funds into investments or channelling cash elsewhere.
- Ongoing fees are tax deductible to your superannuation fund. If these fees were out of pocket, the client can’t claim a tax deduction so it can become more tax effective to pay fees and cost this way.
5. Implementation :
Once you have signed an authority and agreed to become a client, your Financial Adviser (often with the assistance of an administration team) will commence implementing the advice. They will prepare all applications for you to read and sign off on and will follow through on the advice implementation.
Depending on the service you have agreed to, your Financial Adviser will likely have a long term relationship with you. They will set appropriate review periods (usually annually) to meet with you and review your investments and situation. If changes need to be made or your objectives have changed, your Financial Adviser will construct another SoA advising you of the changes they recommend should be made.
Getting correct advice from a professional and experienced Financial Adviser is invaluable. Having a financial plan in place makes choices easier and life less stressful. It’s important to remember the potential benefit of having an appropriate Financial Strategy in place far outweighs the cost of advice.
If you would like to discuss any of the points raised in this article, or would like to speak with someone with regard to any financial matter, please feel free to call The Hopkins Group on 1300 726 082 and ask to speak with a Financial Planner who will be able to assist.
John Hopkins Financial Services Pty Ltd is a Corporate Representative of WealthSure Financial Services Pty Ltd Level 1 190 Stirling Street PERTH WA 6000 ACN:130 288 578 AFSL:326450.
General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.
Any tax advice provided in this document is incidental to the financial advice provided, being unaware of, nor able to consider all aspects of your tax affairs. You should consult your own tax professional to confirm any tax advice provided is appropriate with regards to your total tax planning needs.
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