We all deal with money and make choices that impact our finances every day. A range of factors influence the financial decisions we make and the types of financial decisions we make changes over time as our personal circumstances change.
As our life’s journey unfolds, we inevitably will seek a better understanding of how we can achieve personal wellbeing and security. Wellbeing and security may come in many forms, but here we will explore in brief, some of the reasons and benefits of seeking financial advice.
The way we manage our money today may not reflect our financial needs in the future and hence improving our financial capability brings significant benefit to a sense of security feeling well. Investing in our knowledge and understanding our money behaviours now, makes a positive difference over time.
What is financial advise?
Financial advice is a documented process that supports an individual’s financial decision making. Helping people better understand their situation: access their choices, avoid financial pitfalls and manage changes in life’s circumstance is what financial advice is all about. A financial adviser can assist by helping individuals manage money better on a day-by-day basis and in addition, assist by ensuring that individuals are planning for the future and making informed decisions.
What type of financial advice is available?
In Australia, there are 4 distinct types of advice that an individual can ask for. They are:
General Advice is information or facts about a financial product that does not take into account the personal circumstances of an individual. Super funds and qualified financial advisers can offer this type of advisory service.
Personal Advice provides an advice document which contains findings and recommendations based upon an individual’s personal circumstances. The advice is tailored to meet the individual’s financial goals and objectives and takes into account their personal situation and their financial position. The advice is provided by a qualified financial adviser for an agreed fee.
Limited Advice is personal advice that is limited in scope. It is requested by a person who wants to narrow the topic or subject matter, thereby clearly defining the advice required. It nevertheless is still personal advice. The advice is provided by a qualified financial adviser for an agreed fee and may also be provided by super funds.
Comprehensive Advice is personal advice that can be quite broad and complex. The advice is provided in a Statement of Advice. The advice document may cover such topics as budgeting, savings, debt reduction, superannuation, investment planning, personal insurance cover and retirement planning. The advice is provided by a qualified financial adviser for an agreed fee.
If an advice agreement is entered into, the client’s personal circumstances are reviewed at least annually to determine if the advice is still relevant and operational within the report of recommendations.
Why seek financial advice?
To live well later we all need to act now. Personal stress as a by-product of financial insecurity can affect us all.
Research has shown that over 65% of adults surveyed do not feel financially secure and 60% of us are at least somewhat stressed by our financial situation Ref: Healthy, Wealthy & Work-Wise - Mercer Global Report, 2018.
Imbalances between our need to save and our ability to do so affects all of us, regardless of our income. Life’s daily living expenses get in the way of disciplined savings and the temptation to ’buy now pay later’ is ever more evident in how easy money is being SPENT as opposed to being SAVED. People in their 20’s or 30’s may struggle to understand the basic concepts around debt management and saving for specific goals. As an example, the ability to afford to buy their own home or even their first car at times seems to be a distant dream.
Coupled with over 2 years of the COVID pandemic, people are beginning to feel more unsettled and uneasy. Building upon your personal knowledge and understanding of all things financial, is important to everyone’s future wellbeing and security. This is where the Financial Service Industry and in particular Financial Advisers come in.
Where can you get financial advice?
Seeking financial advice can be confusing but it need not be. The first thing you need to do is to start. Finding a trusted financial adviser who can accompany you on life’s journey is like finding a personal partner. Working with a knowledgeable financial adviser who takes a genuine interest in helping you improve your financial situation can make a world of difference to the life you create in the long run.
When starting, the first port of call may be your Employer. Some employers offer Employee Wellness Programs that allow you to access financial education and advice. This may be through a corporate relationship with a proven financial advisory firm, or it may be available to you through your super fund. So don’t hesitate to ask your employer or your super fund for help.
There are many on-line resources that are available to you. Resources filled with financial education, tools and calculators designed to guide you along the path of financial literacy. A good example of this is the Australian Securities Investment Commission (ASIC) website called Moneysmart. Here you will find resourceful information to get you started. See link below.
Ref: Comments sourced from The True Value of Advice - IOOF Report, 2020
So where to know?
Here are a few questions that may guide you in taking the next steps to financial wellbeing and security.
What does advice mean to you?
Financial advice goes beyond just juggling finances. Advice used well, helps us to integrate our life plan priorities. It helps us to uncover and define the knowns and unknowns and to define the things that are important to us.
We can all relate to the complexity of budgeting, managing our finances, achieving significant goals such as working towards paying off a mortgage, saving for the children’s education or even finding the time and the means to balance life with a well-deserved holiday.
Having the reassurance that we are on track for a comfortable life as we age, is yet another important goal that is often left very late in life.
Many of us are reluctant and place our financial journey on hold to the detriment of our overall wellbeing.
Building self-awareness, feeling more in control, gaining confidence, setting goals and achieving them to attain peace of mind are all part of the journey of being healthy, wealthy and wise. That’s what professional financial advice can bring to our lives.
Any general advice contained above does not take account of your personal objectives, financial situation and needs. You should consider the appropriateness of the advice in light of your own objectives, financial situation and needs before acting on the advice. You should also read the relevant Product Disclosure Statement and TMD before acquiring any product.
