Choosing your financial planner is important, as they will more than likely be a ‘long term partner’ to you and your financial progress (or journey) from where you are now through to your retirement.
There is a range of common mistakes that people make when seeking advice, and these should be known prior, during and after your engagements, to ensure you are getting the very best advice.
Coming unprepared
One of the most important elements to get the ‘right financial advice’ is to come prepared. Technology today is something that can support you in doing so, setting up a Dropbox or Google Drive and getting all your files ready for your meetings.
Files to get prepared are:
- Bank statements – ensuring you have the last 3 to 6-months of your banking statements done.
- Credit Card Statements – same as the above, it is important that despite how large or small your debt may be, you have them in the file.
- Loan statements – car loans, business loans, personal loans, Buy-now-pay-later account (Afterpay/ZipPay) statements.
- Superannuation statements
- Insurance statements
- Shareholding or investment statements
- A list of goals and objectives – short, medium and long term.
- Any other documentation that you feel is important and may have a bearing on your financial decisions now or in the future.
Although this may seem like an exhaustive list, it may indeed seem excessive, the more you have available, the better the outcome for you and your financial planner will be. Why? Because they have all the information, and they are not asking you to come back to them with additional information.
The more you need to go away and come back with information, the more time will be expended on your account by the planner – which in the end will cost you time and money. Failing to plan is planning to fail!
Looking for a quick fix
There are no ‘quick fixes’ to getting rich or retiring, this isn’t a Powerball planning session. Financial planning is the long game, it is about setting systems and processes in place to give you the absolute best opportunity to be financially stable in your future and into your retirement.
If you are walking into your financial planners thinking that you will walk out in a couple of hours with fists-full of cash – you are wrong.
What you will walk away with is a plan, a clear mind and a strategy on how you can set a course for your financial future. Even if you have inherited a significant amount of money or property from the estate of a deceased one, looking for a ‘quick fix’ is a sure path to losing some or all your money.
Irregularity of reviews
Although it may be annoying to set aside $500 per quarter for a review of your financial plan, review your assets and progress, and to look at any new funds, insurance or superannuation options that have come available – it is important.
As we showed in an early chapter, making the smallest of changes, and investing them wisely can make huge differences in your future financial stability and security.
It is vital that you have at least quarterly reviews with your financial planner, to ensure that everything is on track, that your investments are working as they should according to your plan and that if you need to iterate anything – that is to change any investments for any reason, then you are able to do so.
Honesty and Transparency
It does not matter what your financial situation is, or how much money you think you should have, not being honest as to your costs of living, your debt amounts, your income, savings, and other assets. On both sides of the fence – both the client and your financial planner – you both need to be open, honest and transparent.
Putting all your cards on the table early will ensure that you have a clearly defined starting point, goals & objectives while also you understand how the fee structure is set, where your money is going and why.
Don’t be too proud, ashamed or worried about what your financial planner ‘will think about you’, they are not there to judge, they are there to be your financial guide.
Failure to set or work within a budget
One of the most important factors with any financial plan is that you are working within and to a budget. If you are unable to curb excessive spending on discretionary items, thus leading to you being unable to invest, save or pay down that which you have set out in your financial plan – then your success is going to be hampered.
Just like being honest and transparent on the about of debt/equity, you have on your balance sheet – you need to ensure you stick to ‘the plan’ as you have agreed to do with your financial planner.
If you don’t stick to a financial plan, you could see your investments dwindle, putting downward pressure on your household – should you commit to investments that you cannot withdraw from for a period – such as a development fund or term deposit – or you won’t be able to achieve the objectives and goals you set out for yourself.
