In this time of economic crisis where interest rates have dramatically increased, and the cost of living is skyrocketing, is seeing a financial planner a good idea? Adam Humphreys Director of Finance at LZR Partners discusses what you should be doing.
Should you see a Financial Planner?
Absolutely if you think that money is more expensive now and it could be getting worse. You may go through this situation without realizing two years down the track that you could have done something. Our financial planner Scott Martin will look at your overall situation. What’s your wealth creation plan, where are you aiming to get to financially in 12 months, five years, by retirement? He can give that advice whereas as a Broker, I can’t give advice about what’s the wrong or right decision.
A Financial Planner’s advice vs. a Broker’s advice.
A broker can give advice on loan structuring and what your options are, but I can’t say what the right one is for you and your financial situation. You need to consider not just the loan, but what else is happening in your world. Around retirement strategies, wealth creation, tax strategies, those sorts of things. This is what Scott Martin our Financial Planner does. As advisors in our various sectors, we both have a duty of care. His financial plan is to not just look at the immediate transaction or need but look at the bigger picture.
So, for situations where we’re not sure whether you should go down the path of A, B, or C. We discuss options such as do you redraw equity from your home to buy investment assets or shares, plan to add more money to your superannuation, invest in a share portfolio, or do you negative gear, what’s the better strategy?
Sit down and talk to someone.
That’s why you need someone to sit down with and look at the full picture of what’s happening within your super fund, your retirement strategy, your debt strategy. You need someone to give you advice on that full picture. In past times personal financial advice was associated with a financial planner just reviewing and updating your super plan. All they did was create a super plan to suit your situation. That is now definitely not the case.
Financial planning has changed.
Now it is different. In that your overall personal situation is looked at, what’s my return on my super, where’s the better investment to put myself into? But today, the field is larger than that, especially if you have some equity in your house. The cost of living is going through the roof, people do pay a lot of tax and people are on bigger incomes. There are strategies you can put in place to minimize tax that will generate more cash flow.
The Financial Planner difference.
A financial planner like Scott Martin can offer you advice and put in place a firm strategy for long-term wealth creation, whereas a broker can only talk about your loans and what your outcomes are. They can’t say what’s wrong or right. As a broker you’re not licensed to do that, so you should have a financial planner working closely with a broker to steer you in the right direction.
How close do you guys work together?
We’re in the office next door to each other. We talk on a daily basis. There are a lot of informal discussions that go on between us. I mention to him that I’ve got a client in this situation what do you think? High-level talks and from that we can give that initial general advice. But today, people need to be willing to sit down and have an in-depth conversation to get the right outcome.
Good advice.
The only way for us to give good advice is to work together. To have someone start with a financial planner who will sit down and review everything, not just the superficial but in depth. They can set out a plan. It could be a case of its better if you sold your house and downsize or whatever is the best option. Look at all things like putting kids through school, private school fees, and your superannuation, where’s it invested? If people are self-employed, are there ways that they can distribute income or invest that profit into other investments? What are the tax implications of that? It’s not just singular in the approach. You’ve got to look at the bigger picture and make sure you consider everything.
