Is your entire situation considered?

Did you know that there are more than 15,000 financial advisers in Australia? But the guidance that each adviser offers to their clients is very different across professionals, as each will have their own approach, areas of specialisation, and rules and processes applied by the business they work for or by the owner of the financial services licence they operate under.

When you know that you want a specific brand of car, going to a dealership and asking to be sold the best model for you given your specific requirements can be a straightforward decision. In a similar way, if you already know that you want to hold your super with a particular super fund, for instance because you like their community presence and the features you’re aware they offer, it can make sense to contact that fund directly for help from an adviser who works for the fund. They can often help you to understand whether an accumulation account or pension account is right for you, and if they offer differ types of these accounts they can assist in explaining how they differ. They also may help you to select investments and insurance from their offerings that meet your particular needs. And they usually do this at a very low cost, or no cost, to you.

But if you don’t know if that fund is the right fund for you, you won’t be able to get help assessing that product against others in the marketplace. And if you have a business, investment properties, trust, shares in a company that you work for, or other investments and insurances, the advice you can receive from a super fund will be limited and is unlikely to adequately take into consideration these other factors. This can mean not being able to factor into your retirement plans the income that your assets outside of super will generate.

This is likely to give a very misleading indication of whether you are on track to achieve the lifestyle you want in retirement, and regarding how much you can spend on things that are important to you. It can also lead to decisions being made that have a detrimental impact on your wealth position. I’ve seen this happen more than once or twice.

Advisers are legally required to let you know if your situation has more complexity that needs to be addressed than what they can help with. Advisers are typically well versed in asking questions that allow them to capture a complete picture of your entire situation. But if someone doesn’t think a specific aspect of their financial situation is important enough to disclose so their adviser doesn’t know what else someone has in their situation, therein lies the danger. For this reason, it’s important to insist that your adviser knows as much about you as possible. If you’re not comfortable sharing this information with your adviser, perhaps they’re not a good fit for you. It should feel like confiding in a friend who you know is a vault. With confidence that your information will only be used to help formulate strategies and provide you with guidance, and no judgement.

Similar to advisers who advise on superannuation alone, there are some advisers who focus on a specific area of your finances – they might look only at your investments, or perhaps your insurance. For instance, an investment adviser can be of great assistance if you know exactly how much you have available to invest, and you know that you won’t need access to the funds for at least five to ten years. They can help you build a strong portfolio with expert guidance, ensuring you hold certain assets depending on whether you need income, growth, or both.

But what if you have a business that you’re considering putting more money into? Or a home loan that you’ve offset and are considering whether to leave the funds there or to invest them? An investment adviser may let you know what they recommend if you decide to use the cash to invest, but not assess whether that is a better option for you than leaving your loan offset or investing in your business. Similarly, a superannuation adviser may explain how to contribute money to super, but not help you to assess whether that’s an appropriate option for you compared to alternatives.

While super, investments, and insurance are some areas an adviser may choose to specialise in, there are similar considerations spanning across a range of areas – for instance estate planning, tax strategies, business succession planning, and asset protection.
Advice that addresses a limited area of your wealth alone can lead to costly oversights and complications. This is because often one decision can have an impact on another aspect of your finances.

Holistic advice means gaining guidance on your overall situation, including areas outside of your adviser’s wheelhouse through the involvement of professionals in areas like law, tax, and property. A holistic adviser should liaise with your chosen professional, or introduce you to someone if you don’t already have someone you’d like to work with. An initial conversation with a holistic adviser can help gain clarity on which specific areas need to be considered for your personal situation.

Want to have a confidential conversation and learn more about how independent and holistic financial advice may help you or someone you care about? Feel free to reach out for a complimentary, no-obligation phone conversation on +61 7 3521 8044 or email us at Enquiries@brisbaneindependent.com.au.