David French | 18/02/2009 1:13:12 PM

This article was originally published in The Morning Bulletin on 9th May 2002

Making a decision to see a financial planner is often difficult. Many people are not sure what to expect, others are mistrustful and some are not sure of the range of services that a good financial planner can provide.

People who visit financial planners range from start-up savers to large established investors. A decent financial planner will be interested in you whether you have $2,000 or $2 million to invest, or even if you are just getting your life together. Most people come because they lack the knowledge necessary to make the most of their financial situation.

It’s not really surprising that many people are in the dark about their finances. More to the point, most people only begin to worry about money when they have it. That’s a pity because doing some simple things early on will put you in better financial shape for the future.

Some of the common errors people make include putting investments in the name of the highest tax payer, paying off tax deductible debt while still holding non-deductible debt and investing in assets that are inappropriate for the customer’s needs. More advanced plans might include recommendations for borrowing money to invest, considering the issues that will arise when you die or using companies, trusts or other investment vehicles.

Most financial planners get commissions from the products they sell, but a few run their business on a fee for service basis. The fee for service model is better for customers when assessing value for money, but there are still some good financial planners who charge commissions.

One unsavoury feature of the industry is the hard sell approach undertaken by some planners. These people often recommend products promoted by their firm and that mightn’t be in your best interest. If you feel you are being pressured, it is best to remember that for all but the simplest of situations a quality set of recommendations is unlikely to be made on the spot. So insist on something in writing, and read it carefully.

The biggest issue in finding a financial planner is to find someone who is competent, whom you can trust. Unfortunately that is no simple matter. You can find good advice on the Financial Planning Association’s website for consumers and additional information on seeking financial advice and can be found at the Australian Securities and Investments Commission (ASIC) website for consumers.

For all of the good advice that is available, there is no substitute for using common sense. If you feel uneasy about the planner or their recommendations, don’t go ahead. The best planners will have a lot of in-depth knowledge but will be honest if they do not know the answer to a question. They might also want to work in with your accountant or lawyer and will go the extra mile to make the overall experience rewarding and enjoyable.

The Investment Collective (AFSL 471728) is a non-aligned financial planning and investment firm specialising in providing tailored financial and investment advice for individuals and small business. Capricorn Investment Partners Limited's services include financial planning, share trading, portfolio management, insurance broking and self managed super fund administration. Additional information on services provided by The Investment Collective Limited can be found by following this link. Readers are reminded that this document has been prepared for general information purposes only, and any advice contained herein has been prepared without taking into account your financial objectives, situation or needs. Readers are advised to see their financial advisor prior to acting on any general advice.

More articles about financial planning.

Related articles and other links:

• Financial Planning Association of Australia
• FIDO
• FPA's website for consumers