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Is it worth paying for a financial planner?

Published December 2019
 

What is a financial planner, and who are they for?

A financial planner is a qualified professional who can help you to set your short, medium and long-term financial goals and give expert advice to help you achieve them. There’s a common misconception that financial planners are only interested in wealthy clients. This isn’t always the case.  Being wealthy isn’t a prerequisite, and in fact people from a range of backgrounds and situations can potentially benefit from a financial planner’s services. They have in-depth knowledge of all kinds of financial matters from investing and superannuation to insurance and debt.

Everyone has different financial needs depending on their life stage and individual circumstances. In many cases, generic advice you can find yourself isn’t enough—this is where a financial planner comes in. They’ll assess your situation, get an understanding of your unique financial needs, and create a tailored strategy to suit you and your goals.

To learn more about a financial planner’s expertise and how they can meet your needs, read our guide to what a financial planner does.

Why a financial planner is worth it?

Financial planners understand how to achieve financial goals

Whether you’re saving for a house deposit, managing debt, planning for retirement, already have an investment portfolio or are thinking about investing your money, a financial planner can devise a plan to meet your goals. They’ll suggest effective strategies to reach them as efficiently as possible, and you can re-engage them to review your plan in the future if things change. Common matters for which people seek a financial planner’s advice include superannuation, budgeting, tax management, asset management, estate planning and more.

Financial planners have in-depth knowledge of financial products

Financial planners are experts in financial products, tools and strategies, and they’ll know which combination of these can support you in achieving your financial objectives. These can include particular types of insurance to suit your circumstances, how to best manage your savings and borrowings, budgeting and general money management, and tailored investment strategies.

Financial planners can save you a lot of time and energy

While it is possible to manage your finances on your own, engaging a professional can save you a lot of time, effort and energy, especially if overseeing them yourself leaves you feeling stressed or confused.

Rather than having to stay on top of economic and legislative changes that impact your financial situation, a financial planner can do the legwork on your behalf. If you’re using a financial planner’s services to guide your investment strategy, they may also be able to manage your portfolio.

In the long run, you may make your money back

While in most cases it does cost money to use a financial planner’s services, according to a 2016 study by the US arm of Vanguard Investments you may recover your upfront costs in the long run. This is because financial planning can lead to more efficient money management, including tax effectiveness, savings on interest, faster home-loan repayment, and other strategies that save and look to maximise your money.

The Vanguard Investments study found that financial planners could add a potential 3 per cent increase in net returns for their clients through a combination of sourcing lower cost investment tools, managing asset allocation, helping clients devise and stick to a financial plan, and other tactics.

What to look for in a financial planner

When choosing a financial planner there are a few things to look out for. First, find out about their qualifications. Financial planners need to have a minimum level of education and be licensed to give advice. To learn more about financial-planning qualifications, you can read our financial planning FAQs.

You may also want a financial planner with plenty of experience, which could equate to time spent advising, their educational background or the breadth of clients they service.

During your first appointment it is important to communicate which financial areas you feel that you need help with. Your financial planner may also identify other areas of advice that are relevant to your circumstances that you may not have thought about, but should be addressed to ensure that your best interests are being met.

How does payment work with financial planners?

Generally speaking, financial planners tend to set their own fees and payment structures. Some financial planners charge flat fees for different services (known as fee-for-service), while others calculate their fees as a percentage of the value of your portfolio. That means you’d pay more if your portfolio is worth $50,000 and less if it’s worth $10,000. Some financial planners may also offer you an ongoing service arrangement with them. Under this arrangement they will charge an ongoing advice fee for an agreed service and period of time.

ANZ Financial Planning only offers a fee-for-service payment structure. This gives our customers the flexibility to seek financial advice if and when they need it, and only pay for the services they require. For more information on financial planning fees, read our guide to how much a financial planner costs.

What qualifications does a financial planner have?

There are some qualifications a financial planner must have, including compulsory education requirements and holding certain licenses. For more information on the various conditions financial planners must meet you can read our financial planning FAQs.

Understanding financial planning fees

Financial planners generally charge an upfront fee to cover the advice given and its implementation. Some financial planners may charge regular fees for ongoing advice. For more information on understanding financial planning fees, check out our guide to how much a financial planner costs.

(ANZ Financial Planning only offers a fee-for-service payment structure, not an ongoing-service agreement. This gives our customers the flexibility to seek financial advice if and when they need it, paying for it as they go, rather than paying an annual fee regardless of what advice is required.)

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© Australia and New Zealand Banking Group Limited (ANZ) ABN 11 005 357 522.

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