In the past, your financial adviser simply told you what to do with your investments and plied you with insurance. These days, a good adviser takes on a far broader, more holistic approach to your money.
Historically, the financial services industry was about selling pension plans and life insurance. When you think about life insurance, you might conjure up an image of a balding middle-aged man, trudging door to door, selling his life insurance policies. And for a while, that’s what it was, before phone calls became cheap and then the invention of the internet.
When call centres took over from life insurance salesman, financial planning became about managing investments. Mum and Dad investors, with their retirement nest egg, squirreling their money away in fixed term investments at their bank.
And then some enterprising advisers realised there was so much more to finance than just insurance and investment. That looking at finances holistically should take into account how to increase income, managing outgoings better, budgeting, tax planning, thinking about retirement in real terms, estate planning… more than just a life insurance policy and crossing your fingers.
Financial planners should connect the financial dots of your life. Money isn’t just about dollars and cents, but what you want your life to be. $10,000 means very little without context, but in real terms, it could be the amount you need to save to complete the deposit for your first house.
Your adviser should be a part of your life. When you go to make a financial decision, you should think about your adviser—and you should be able to run your ideas past them.
How do you know they’ll be good?
When you first meet your potential financial adviser, there are a few things you need to look out for.
- Do they specialise?
Are they specialists in some form of finance? And if they are, is it what you need? Financial advisers can focus on specific areas. It doesn’t mean they exclusively serve these groups of people, but it does mean they’ll be incredibly effective in those areas.
- Small businesses
- Families
- Specific industries like dentists or doctors
- Couples/ singles
- High-earners
They’ll understand the key problems and challenges that group of people faces and will have tried and tested strategies for resolving these.
- What questions do they ask you?
As much as this meeting is about you meeting them, it’s also about them assessing if you’ll be a good fit for their business. They should be asking questions that really drill down to the heart of the problem. It’s not about how much money you have in the bank, although that’s part of the puzzle, but it’s about your long term plans and goals, your attitudes towards money, and what you really need.
- They should be able to clearly tell you what they offer
They can’t guarantee an investment income of a specific dollar amount, and they can’t tell when the next global financial crisis will strike. But, they can tell you what they will do, the services they offer, and the value they’ll provide you.
- Regular meetings and check ins if your situation changes
- Keeping you up to date with financial changes that could affect you
- Be accessible to give feedback and advice when you need it
- Check-ins that you’re sticking to your plans and moving towards your goals
- Introductions to people that might help you along your way
- Sensible income management advice
- Estate planning
- Retirement planning
- Help with relevant family issues
- Tax advice
- Advice around any governmental changes that can affect you
- Regular offerings of information about topical issues in the media
- Planning for elderly parents finances
- Help with education funding for your kids
- Managing, planning, and reducing debt where needed
- Insurance to protect the family from unforeseen risks
If your financial adviser isn’t offering these services, if they feel too busy to chat, or if they’re not abreast of current financial issues, it’s time to find a new adviser. They should be engaged with you, your finances, and the wider community and broad economy matters.
- Technical recommendations tailored to you
They won’t give you specific advice on the first meeting, but they will be able to put together a comprehensive plan with explicit recommendations. These will be geared towards your goals and the outcomes you want.
- They will have recommendations
They’ll have a proven track record and be able to show the quality of the services they offer. There will be examples of families, businesses, or organisations they’ve helped to achieve their goals. Current and past clients should be able to recommend the adviser to you and explain how amazing they are.
When you’re shopping around for your financial planner, take time to check out the value they provide. If they can’t articulate what it is they offer, or they have a one-size-fits-all approach, keep looking for someone who can truly help you find financial freedom. And when you need the best, contact Sam Kodi.