When NOT to See a Financial Planner

Before we delve into a topic I’ve been wanting to talk about for a while now, a short disclaimer: this post is only reflective of how we do things here at 7Wealth and may not be applicable to every other financial planning practice, as effective financial planning can come in all sorts of shapes and sizes.
The fact that only about 20% of Australians look to financial planners for expert advice on how to improve their financial situation demonstrates the lack of awareness that many people have for what financial planners can do for many aspects of their life.

This post aims to address some of the issues and traditional views that a lot of the public hold about financial planners and what they do.  
To do this, I want to tackle a few common misconceptions that we often hear being thrown around regarding financial planning when talking to friends and families (in fact, while researching for this post I would subtly steer a conversation with someone towards their opinion on what a financial planner does and then make up a very clever excuse to slink off and note down their thoughts – sneaky 😉): 

  • We are NOT accountants. This is possibly the most common misunderstanding about financial planners. I admit that from the point of view of someone outside the financial services industry we probably seem pretty similar – we both work with money and drink a lot of coffee. A good way to illustrate the differences is with a car analogy: an accountant will help you check out the rear-view mirror to make sure everything is in order behind you, while a financial planner will flick on the headlights and snap focus right back to what is in front of you. The two roles are very different – a planner focuses on helping you (the individual) to manage your money and build wealth for the future, while an accountant is first and foremost a specialised tax professional who may also offer services in business growth and structuring. The two roles don’t oppose each other but actually complement each other. 7Wealth, for example, works closely and shares many clients with an accountant to provide a holistic service to our clients.  
  • It may surprise a lot of you, but we financial planners don’t just work with numbers.  The figures we use are usually an illustration of where you are now compared to where we can help you be. In fact, most of our time is spent working with clients to discover exactly what is most important to them and how we could position their finances in a way that aligns with their goals, both short and long-term. Which brings me to my next point… 
  • We don’t just say “stop spending all of your money”. A lot of people think we’re going to tell them this and charge them $1,000 for it, a bit like when you go to the doctors with a cold and they tell you that you have a cold. No kidding! In all seriousness, a budget is often a part of the strategies we create for our clients, however it’s not the only part and usually any recommended cuts to your expenses are put in place with the intention of helping you to achieve what is most important to you. Much of the time our clients won’t even notice the limitations we’ve suggested for their spending as we always provide methods that make it easy to do so! 
  • We’re not just here to sort out your super 2 months before you retire or tell you where to stick the $150,000 inheritance you received from grandma (god bless her soul) last week. You don’t have to wait until you encounter a problem or a reason to see a planner; the earlier in life you see us the better. The main reason for this is it gives your money more time to grow in the right environment (which a planner will help you with), which, as Warren Buffet will attest to, is a very powerful opportunity.  
  • Our job doesn’t revolve around flogging you the financial products that will snag us the highest commissions and pay off the mortgage in a few years. Historically, however, financial advising was much like that and resulted in the interests of the advisor being put before those of their clients, so it’s not surprising that planners are often perceived as suited-up salesman. In fact, some of the major regulatory changes to the industry over the past decade mean that we legally can’t recommend products that aren’t in the best interests of our clients and have ensured that commission-based fee structures are a thing of the past.  

The Financial Services Royal Commission has been long overdue and required to repair our profession for the sake of all the financial planners out there that have their clients’ best interests ahead of their own. As with any industry there are some people who choose to cut corners, take advantage of others and drag those down that are doing the right thing. We can’t wait to see the announcements early Feb 2019 from the Royal Commission and encourage change in our industry.   

One thing I do ask is never assume that financial planners are “all the same” until you have at least formed your own opinion through meeting us, rather than trusting those who have told you theirs or what you have read in the media. We encourage you to speak to at least 3 financial planners so you understand how each of them operate and the services they offer that could potentially change your life. 

January 23, 2019