Financial Planners and advisors are charged with managing your money for your future. It is not about they want, their ideas or their interests, it is of the upmost importance that you remember that you are the client and it’s your money.
In recent times, the Royal Commission has gone along way to stamp out a lot of the ‘cowboys’ of the industry, but there are some key watch-outs when it comes to financial planning.
It’s about you!
As mentioned in this and previous chapters, your financial journey is about you, your family, your future, your retirement and your succession planning. Therefore, it is so important to engage your accountant, lawyer and financial planner/advisor collaboratively, so that your needs are being met.
In some instances, it has been seen that financial planners and advisors recommend products and services that they best benefit from – in terms of commissions and kickbacks – while not necessarily being the best for you.
This is something that you need to ensure you ask for ‘like for like performance of the fund/ investment/ insurance vs. comparable options or substitutes. No different to you looking at several open homes from several different agents before you commit to buying a house.
And just like buying a house, you are well within your rights to have your ‘building and pest inspections’, by asking your accountant and/or lawyer to review the details and provide independent and trusted advice.
You are not expected to be a financial expert
One of the common issues as a client is that you are not a financial expert. You may not jump out of bed and read the financial section of the financial review each morning. You may not have been through a finance degree, nor be an accredited financial planner – and you are not expected to be.
As part of the ‘duty of care’ that your financial planner is obligated to provide, they must explain everything to you within your current level of understanding. They should avoid bamboozling you with financial jargon, be condescending and push products or services on you, or have you sign up to things that you simply don’t understand.
It is ok not to understand financial products and services, as it is often said that they were designed complicated by Wall Street Bankers so only they – and a select few - could understand them.
As a client, you have every right to understand what you a signing up for and not be treated by anyone you are paying fees to in a demeaning way. IF this is happening, report them to the Financial Planning Association and see how they like that?
Communication is the key.
A trait of a good financial planner is clear, concise and regular communication with clients. Thanks to digital mediums – such as Zoom, Teams, Slack, Asana and more, there is no excuse even in a COVID-19 lockdown for financial planners not to be communicating with you.
Communication is the key to sound and prompt decision making, and if your financial planner is not returning your calls in a timely manner, not responding to emails or not uploading files to you as they said they would – you need to call that out.
However, on the flip side, remember they are busy running their own business, with other clients and their own small business considerations – so there is a balance.
Honesty – they must speak their mind!
When it comes to your financial matters, you want a financial planner that can speak their mind – and call the situation as it is.
You may get upset or feel embarrassed by their feedback or observations on your financial position, but it is better than signing up for services or investments, financial plans, or policies that you can’t afford or that are not right for you.
Not only does the planner need to speak their minds and be honest, but so do you as the client. It is paramount that you have a two-way, open and honest conversation – otherwise things will get missed, skipped or overlooked.
Issues with getting a second opinion.
Many professionals do not like their work critiqued by other professionals – no where more than in the financial services sector.
There are most certainly going to be differing opinions in the selection of financial product and services by your trusted advisor – ie. lawyers, accountants, financial planners etc – however, it is always important to get a second opinion.
As previously outlined, there are clearly defined roles and responsibilities of your professional service providers, they should not cross over. That is not to say that your accountant cannot review the validity of an investment option or change of superannuation provider as a ‘fresh set of eyes’.
Remembering they have financial training as well and know what to look for. Meanwhile, your lawyers can review the fund or investment options, check the legal validity, and undertake some due diligence for you.
It’s important to keep your advisors in their swimming lanes, but it never hurts to get a second opinion – remember it’s your money and your future we are talking about here.
The Financial Planning Association and Royal Commission into the banking and financial services sector have largely stamped out much of the bad advice and unscrupulous operators in the industry. However, unfortunately where there is money, there are people wanting to take advantage.
This may not be your financial planner themselves, but it may be those around the planner – you never know. As such, it is always important to take your time, never rush your decisions, review all the PDS (product disclosure statements) and get a second opinion – remember, it is your money and your decision.
