It’s difficult to put an actual number on how much financial advice is worth.
Different financial institutions have tried to measure it. For example, a Morningstar report suggests that effective advice can generate 29% more income in retirement, while Vanguard believes that the value of investment advice could be as high as 3% per annum in net returns.
Ultimately, however, much of the real value is intangible. It comes with the peace of mind you derive from knowing you have an effective plan in place, and being confident that you aren’t making any avoidable mistakes.
To give you an idea of the unquantifiable value that working with an expert financial planner can give you, here are six ways getting advice from an expert can help you plan your financial future.
1. An adviser can help you establish your needs and wants
The value of talking to an adviser may immediately become apparent at your first meeting.
A key part of planning your financial future is to start to actually think about what you want for you and your loved ones.
You may not have sat down and thought about it in any detail before, so when you do, you’ll immediately benefit from gaining a clear idea of what your long-term financial aims are.
You may be uncomfortable about being challenged in this way, but it’s only by thinking about your aspirations and potential issues you feel may arise, that you can start planning ahead.
2. An adviser will ensure you put a robust plan together to attain your objectives
Once your adviser has helped you to assess your objectives, their next role will be to work with you to put a plan together that helps you achieve them. This can help ensure you have considered all the necessary factors that could affect your outcomes and have addressed them in full.
Having established what your needs and objectives are, an effective plan will help translate those objectives into numbers on a page.
From this, you’ll gain an idea of how much you should be looking to save each month, and will set out how you may wish to invest your money to meet your targets. It will also ensure you are taking the necessary steps to mitigate tax and have plans in place to address any future risks and personal upheaval.
Without a plan you could end up rudderless and simply reacting to events as they happen rather than acting according to your long-term strategy.
3. They will help you regularly review your plans
While some advice can simply be transactional, the real value of independent advice comes through not only having a long-term plan in place, but also reviewing it regularly.
Indeed, much of the intangible value of advice comes through the long-term relationship you build up with a financial planning expert over a long period.
At a simple level, a review of your plan will confirm if you are on track to achieve your financial goals, or whether you need to make some adjustments such as the amount you are saving or other aspects of your financial lifestyle.
Importantly, they will also help you react to any big changes in your circumstances, such as changing jobs, buying a bigger property, or childbirth. All of these are likely to necessitate changes to your plans, and expert advice can be crucial to ensure you are making the right decisions.
4. An adviser provides you with a valuable confidant
Perhaps the most often overlooked advantage you will glean from working with an experienced adviser is having a confidant you can talk to.
Outside you and your spouse or partner, they will probably have a better idea of your financial circumstances than anyone. Having someone who understands your position who you can talk to about ideas, and potential problems, can add immeasurable value.
For example, you may be thinking of changing jobs, starting your own business or moving to a different city, or even country. Clearly the financial implications of all of these will be challenging, so having someone who you can talk to about the implications, as well as identifying the opportunities, will be reassuring.
5. They could help you avoid costly mistakes and take advantage of opportunities
According to Finder, only 16% of Australians use a financial planner or adviser. This means that potentially 84% of people are adopting a DIY approach to their financial planning with the inherent danger of making mistakes that could end up costing them money.
Along similar lines, they may also miss out potential tax mitigation options that could help them reduce the amount of tax they pay.
An experienced adviser will also give you valuable insight when it comes to avoiding some key financial behaviours that could end up costing you money, particularly when it comes to your investment strategy.
To begin with, they will work with you to ensure your money is invested effectively to maximise growth potential.
Equally importantly, they can ensure you don’t overreact to external events, such as immediately looking to sell assets in the event of an abrupt market fall.
6. Cashflow forecasting can give you invaluable insight into your financial future
While no one has been able to invent a crystal ball that can help you see your future, there’s no doubt that cashflow forecasting can give you real insight into your plans and what your financial future could look like.
An experienced adviser will be able to use a forecasting model to project ahead based on your current wealth and future investment and income plans. This will give you an excellent idea of what your finances could look like at key times in the future, such as when you plan to retire.
The forecasting process will take into account predictions of variable figures such as the growth you will get on your superannuation investments, as well as inflation and the cost of borrowing.
Importantly, an adviser can work with you to help assess the effect that different events could have on your financial future. These could include external events such as a market crash as well as personal decisions you may want to make like retiring early.
As with all other issues relating to working with an adviser, you will have the reassurance that you are on track and have sufficient financial resilience to deal with any issues that may come up.
Find out more: 4 key benefits of cashflow forecasting and The 4 stages of your life where cashflow forecasting could be invaluable
Get in touch
As you’ve read, expert advice when it comes to planning your financial future is important. If you want to discuss any of the issues you’ve read about in this article, please get in touch with us.
Please note
This article is for information only, it does not take into account your personal objectives, financial situation, or needs.
Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.
