David French | 18/02/2009 1:24:29 PM

This article was published as ‘What can we do for you?’ in The Morning Bulletin on 12th July 2002.

There are a million reasons not to see a financial planner. No money, no time. They’re just a bunch of sharks! If financial planners were any good they’d all be rich!

Research conducted by the Financial Planning Association in 2007 has shown that over three quarters of Australians have experienced financial difficulties at some point in their lives. Other research found that more than 80 per cent of survey respondents did not have a formal plan for their investing. The strange thing is that 70 per cent of respondents said they were concerned that they might not have enough to retire.

The point is you can’t have it both ways. Most people will be better off if they can find a competent financial planner. It can help avoid costly mistakes and make more of what you have. Selecting a financial planner needs careful thought and preparation. The Financial Services Industry regulator, the Australian Securities and Investments Commission (ASIC), produces excellent information addressing this matter. One of their documents is called “Getting Advice” and you can download it from www.fido.gov.au.

So, once you have found your financial planner, what can they help you with?

First, an advisor needs to spend sufficient time with you to get to know your requirements. This includes not only the requirements for investment, but also the nature of the investments and how they will perform under certain market conditions. The better financial planners will collect extensive data from their clients to work this out and that, plus the general tone of the discussion, forms the basis from which to develop their financial plan.

Second, your current situation needs to be addressed. Quite often just rearranging your existing assets and spending patterns can make you quite a lot better off. Simple things like using an offset account may make you very much better off.

Third, there is the structure of your assets. Superannuation is a minefield – do you make an undeducted contribution or a taxed contribution? Is superannuation even appropriate? What about a company or a trust? How about simply making sure investment income accrues to the partner who has the lowest tax bracket?

Fourth, the investments themselves. What is the investment designed to achieve? How will it perform under adverse conditions? If a company, is it profitable and are the profits real? Managed funds have to be monitored regarding the investments they hold and whether they are sticking to their investment mandate.

Finally there is a need to monitor the portfolio and to stay on top of the issues. If you invest for any length of time, it’s unlikely that your portfolio will always increase in value. But some falls in value are worrisome, and others are not. A good financial advisor will help you determine when you need to take action. They will help you to set up a portfolio so that, over time, your financial situation will be better off. There’s no magic pill, and mostly it’s just a matter of hard yards. It’s a matter of finding someone competent whom you can trust.

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:

• FIDO - Getting good advice