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Exploring the Value of Financial Advice
Do you worry about money? Concerned about how your investments might fare in this current economic climate? Dreaming about having more money to reach your goals? Wondering what you should be doing with your hard-earned cash to make the most out of it?
If you’ve thought about any of the above at some stage, not only are you not alone – you’re part of a significant majority of Australians. Even before COVID-19, studies show that financial stress and anxiety affects over 65% of Australians on a monthly basis, and 23.5% worry about money daily. Furthermore, 52% of Australians say financial issues directly affect their mental health.
This financial stress reduces significantly for those who receive financial advice, with 50% of those surveyed saying that it has improved their mental health; and 38% noting that their family life has improved. With their being a documented link between establishing a relationship with a financial adviser and your overall wellbeing, let’s break down the value of advice, going well beyond investments and superannuation.
The Role of an Advisor in Reaching Your Goals
Seeking advice from a financial adviser goes way beyond just having someone on your team to manage your investments and super. Maintaining this advisory relationship also allows you to do the following:
- Gain Clarity: How can you plan for the future, if you aren’t crystal clear on what you want your future to be? An adviser’s framework enables you to identify your aspirations, and then develop strategies to get you there.
- Enjoy Your Differences While Being on the Same Page: Financial advisers provide you and your partner with a framework that allows you both to pursue your personal and shared passions.
- Stress Less: Financial stress comes from being controlled by money, rather than your money being controlled by you. Financial advice gets you back in charge and reduces this stress.
- Overcome Procrastination: Not knowing where to start is an issue in many facets of life, with money being no exception. The clarity and confidence gained by a relationship with an adviser allows you to get motivated with practical, actionable advice.
- Simplify the Complex: Over time, managing your finances becomes increasingly complex. Finding an adviser that understands the difficult stuff like the back of their hand means it will make more sense to you – empowering you to take action.
- Keep Your Money in Order So You Can Enjoy It: While you focus on your business or career, why would you want to spend your precious spare time organising your financial affairs? Advisers take the hard work on themselves while you enjoy life’s pleasures – whatever that may mean for you.
- Sift Out the Noise: Opinions about what you “should” be doing with your money certainly aren’t in short supply. Whether its friends, family, the media or the internet, good financial advice from a professional will cut through the noise and arm you with the personalised information you need to make good decisions.
- Your Adviser Comes with Teammates: Partnering up with an adviser gives you access to more than that one person – an entire team of specialists, both internally and externally, are on board to help you navigate all of life’s twists and turns. This includes specialists in legislation, taxation, estate planning, strategy, as well as a broad network offering unique opportunities for you and your family.
- Avoid Disaster: Advisers are your sounding board any time you have a concern or idea. Planning ahead and being proactive with a professional by your side mitigates the risk of major disasters derailing all your hard work.
- Education: Knowledge is power – nowhere is this more relevant than with money. Advisers keep you in the loop and provide you with the knowledge and information to make appropriate, well-informed decisions.
Why do Australians Seek Financial Advice?
There are often triggers involved when a person decides to seek out the assistance of a financial planner. Major triggers include starting a family; winding down to retirement; planning a major purchase (e.g. family home or investment property); looking to address a downturn in the market; and recommendations from friends or family. These drivers cover over 80% of the reasons some Australians take the step to seek advice.
After that motivating event happens, and advice is sought, most people use the services of a financial adviser to address their financial and lifestyle goals. The top three for each are as follows:
|Financial Goal||%||Lifestyle Goal||%|
|Investing in the most appropriate manner||47.6%||Living desired lifestyle||43.1%|
|Having a savings plan||40.9%||Not having to worry about money||42.7%|
|Getting the most out of superannuation (excl. SMSF)||39.7%||Improving mental health||39.5%|
Overall, the vast majority of Australians who seek the advice of a professional are able to achieve their financial goals, reduce their stress, and improve their mental wellbeing. On the other side of the coin, there are plenty of Aussies who never seek financial advice…
Why do some Australians NOT Seek Financial Advice?
When you consider the benefits of financial advice, it can be surprising how many people in Australia don’t ever seek it out. But that’s not to say they don’t have their reasons. The theme that pops up time and time again is that they don’t see the value in it – more than a third of those who don’t seek advice believe they cannot afford it, and more a third believe that their circumstances do not justify advice.
Common barriers to seeking advice include not knowing the following: the full financial outlay; what they’ll get for their money; where the money goes; what the value is; and how their potential adviser has performed with clients in similar situations to themselves. The bottom line is, receiving sound financial advice from a reputable professional has value beyond the monetary. The positive impact that financial health has on other aspects of wellbeing are factors that those who haven’t sought advice tend to overlook. Generally speaking, doing your research and finding the advisor that is right for you will see you reaping the rewards in no time.
Different Styles of Advice Seekers
Interestingly, there are not only differences between financial advisers and what they specialise in, but also differences between the types of people that seek advice. The good news is – all can benefit from quality financial guidance, no matter how they approach it in the first place. The four “Navigation styles” are as follows:
- Celestial Navigators: Big-picture thinkers who value competency and trust in their adviser in order to address their needs.
- GPS Navigators: Focussed on value-for-money and transparency in costs & benefits. GPS navigators prioritise current issues and want them addressed with accuracy and expertise.
- Radio Navigators: Gain comfort and familiarity with advisers through positive reviews from existing or previous clients. Rapport-building is important, and radio navigators appreciate the human interaction and intuitive guidance side of financial advice.
- Compass Navigators: Low/scaled fees are a high priority for compass navigators. Personal referrals from friends and family are important, and they generally want to be pointed in the right direction.
So, which Navigation Style do you associate with most? Regardless of your approach to seeking and taking on financial advice, all Australians can benefit from the services of an adviser. Whether it be triggered by a specific life event, or a desire to build a long-lasting relationship throughout the course of many years, the value of sound, thoughtful and well-informed financial advice cannot be understated.
If you’re ready to take the next steps to achieving your financial and lifestyle goals, get in touch with the Wealth team at McKinley Plowman today on 08 9301 2200 or visit www.mckinleyplowman.com.au/services/wealth.
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