Busting the myths about financial advice
By AMP Financial Planner Robert
Inukihaangana
We all look for professional advice when it comes to building a home or
diagnosing an illness. But according to research, between 60 and 80 per cent of
Australians have never used a financial planner.*
Many
people don't seek financial advice because they're embarrassed about their
financial situation, they don't have enough money to invest or they think it's
only relevant for retirement planning.
Everyone
can benefit from visiting a financial planner whether they're young or old,
high or low income, single or married. Financial advice can help people save
money, protect their loved ones and build wealth for the future.
Five myths and facts about financial advice:
Myth: I don't have
enough money to invest
Fact: You
don't need a large lump sum to invest or a high disposable income
Everyone,
regardless of their income or how much savings they have, can benefit from visiting
a financial planner. You don't need to be a high net worth individual to reap
the rewards of advice. Financial planners can help with everything from
budgeting and debt management, through to superannuation and retirement
planning.
Myth:
It's only for people who are close to retirement
Fact: It's never too early to seek advice
Many people
don't think it's necessary to visit a financial planner until they're
approaching retirement. While it's never too late to seek advice, it's also
never too early. Young people who are just starting their working life can
benefit greatly from financial advice. People who establish good money habits
early on are less likely to develop financial problems later in life. Also, the
earlier a person starts building wealth, the better. For instance, salary sacrificing
into super from a young age can dramatically boost a person's nest egg due to
the effects of compound interest.
Myth:
I don't need it and I don't have the time
Fact: It's one of the most important things you
can do
Money
issues are often delegated to the 'too hard basket', but there can be
devastating consequences if people bury their heads in the sand. Most
Australians don't have adequate insurance to protect their loved ones in the
event of loss of income. The big four are life insurance, income protection,
total and permanent disability insurance (TPD) and trauma insurance. It's also
vital to have a will to ensure the right funds end up in the right hands at the
right time and an enduring power of attorney to enable someone to look after
your affairs if you’re incapable. People with kids also need to consider
guardianship.
Myth:
Planner fees are too costly
Fact: You can't afford not to have financial
advice
Many
people avoid visiting a financial planner because they are worried about the
cost, but when you consider all the benefits of advice, it is good value for
money. Planners sometimes offer a free initial consultation or a discounted
first fee so people don't have to engage in the complete financial planning process straight
away. People who want to spread out the cost can opt for scaled advice, which addresses
single financial issues at a time, such as budgeting, insurance or
superannuation.
Myth: I
won't get independent advice
Fact: It's all about choosing the right planner
It's
important for people to take the time to find someone they trust. Look for a
licensed planner who does not receive up front commissions on super, managed
funds or retirement products. Look for a planner who charges a fair fee for the
advice process and a modest fee for implementation. Ask for recommendations
from friends, colleagues and family, or contact the Financial Planning Association for
a referral. Finances are very personal, so people need to look for someone who
understands them and their situation.
*Robert Inukihaangana is an Authorised
Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS
Licence No. 232706.
Any advice given is general only and has not taken into account your
objectives, financial situation or needs.
Because of this, before acting on any advice, you should consult a
financial planner to consider how appropriate the advice is to your objectives,
financial situation and needs.
*Australian
Securities and Investment Commission, Report 224, Access to financial advice in
Australia, December 2010
It is certainly important to have some form of insurance cover in place. You may resent having to pay a monthly premium but at least you can be sure that your financial security won't be compromised should unfortunate events occur.
ReplyDeleteRegards,
David from incomeprotectionquotes.co.za