Masterclass, Money

Do you need to see a financial planner?

Published on February 25, 2016 1:00 pm, by

People meet with financial advisers for all sorts of reasons.  My husband and I decided recently that we had to take a look at our life insurance and income protection.  Things are getting serious with 3 kids in school and the large expenses that incurs on top of our essential living expenses.

Why I went to see a financial adviser

I picked up the phone and contacted my superannuation provider to discuss my investment options and life insurance within super.  In the course of the conversation I was told that I can change my investment options online but to increase my risk insurance I will need to see an adviser.  So that was my number one reason to decide it was the right time to see a financial planner.

Given updating my investment options and increasing my insurance was relatively simple in the scheme of things I could have completed a questionnaire and the adviser would have given me some options on what I could do.  However the guy who I was referred to has a preference for meeting people face to face.  This turned out well for me as I got to ask a lot of questions, clarify a few points, and decide that it was smarter to do a full financial plan (super for me & my husband as well as a plan for both of us) for just over the price it would be for my super to be sorted out.  I also got to question and clarify the cost, what I needed to provide, and what I would get back.

We have worked in financial services for many years and our knowledge is sound.  We still learnt a few things.  Just the simple process of doing the questionnaire reminded us how important it is to stop and reassess every couple of years.

How much does it cost?

The cost of a plan will differ based on who your planner/adviser is and the complexity of what they are doing for you.  The adviser will need to tell you up front what the cost will be and at which point you are locked in to proceeding and making payment.  There is potentially an opportunity for your plan to be paid for out of your superannuation fund.

Financial goals

We had to sit down and discuss where we are, where we are going and where we want to be.  Everything we talked about we had to consider the financial cost.  We then had to be able to prioritise as we really couldn’t do everything we would like to, especially in the next 5 years.

So the form asked for us to identify the following, and we did find it helpful:

  • Short term (< 2 years) – for us this included things such as holidays, repaying a certain amount of our mortgage and kids’ education
  • Medium term (2 – 5 years) – this was pretty much the same as the short term, though we did stretch repaying that extra off the mortgage down to the medium term
  • Long term (>5 years) – this included being comfortable for retirement, owning a property outright that we could live, and kids’ education

Something we’d never really talked about was how long we would support and children and in what way.  Not only did we have to do that, we then needed to articulate and plan for it.  Would we count on supporting them until they finished high school, university (if they go) or until 21?  Having to complete these questions, meant that we could no longer ignore them, or the impact they have and will continue to have over the next 5 to 10 years.

Risk profile

We took out our first unit trust 15 years ago and at that time we discussed risk profiles.  My husband’s was quite aggressive where mine was quite conservative.  Completing a new risk profile was an interesting exercise, particularly when we found that we now have the same profile.  His has become more conservative with age and mine less.

The questions you are asked include your knowledge and comfort with financial markets, and your behaviours when there are adjustments in the market, whether that be an upswing or downturn.  Your financial planner uses this information to understand more about you and recommend products that fit.

What should I do before I see a planner?

Seeing a planner was important for us given our stage of life.  There are some things that you can do before you go, to put you in a position to get maximum value.

These things might include understanding your cash flow and ensuring you are spending less than you earn.  Once you have a budget and are sticking to it, it’s important to pay off personal and unsecured debt.  Then it might be the right time for you to have a chat to a planner and see if they can help you save towards your financial goals and protect the wealth that you are building.

Can MoneyBrilliant help me?

For the planner to give you the best plan for your circumstances they will need to understand how much you are spending.  If you don’t have a budget or accurate idea of your monthly or annual spend figure, you can get this with speed and ease from the MoneyBrilliant service.  MoneyBrilliant allows you to link your bank accounts, categorise your spending and give your planner a clear and accurate view of your outgoings over the last three or twelve months.  As well as that you will need to have a good knowledge of your assets, liabilities and any financial commitments.  Being prepared with all the information you have about your financial situation will result in a more accurate and tailored plan for your circumstances.

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Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.

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