David French | 6/04/2011 3:25:28 PM

This article was originally published in The Morning Bulletin in March 2011. Titled What can a financial planner do?

Since well before the GFC, financial advisors have been getting a bad wrap in the press. And frankly, there are certain things about the industry that I find downright embarrassing. Many in the industry have gone out of their way to bite the feeding hand – the clients. I much prefer to be thought as an applied economist, a profession with a superb history of deep thought, and the odd revolution.

Such comments are perhaps heretical, considering that I manage a financial advising company. Thing is, not all financial advice businesses are the same.

Ours was built, fee for service. We provide structuring advice, work in with clients’ accountants and lawyers and we build the investment portfolios ourselves. It’s a complex business, in which we have made significant investment for the long term. Contrast that with the traditional financial planner, which rightly or wrongly, has typically simply sold investment products.

Interestingly, the financial planning industry grew out of the life insurance industry. You would probably think of stockbrokers or accountants as natural root of personal financial advice, but those respected professions seem to have been slow to recognise the needs of the general population.

Things are changing. Within a few years little will differentiate financial planners, accountants and even stockbrokers. Without a special licence, accountants cannot now provide advice on self-managed superannuation or investments. Soon, financial planners will need formal tax qualifications, and in 20 months all will have to work under a fee for service model. With qualification requirements increasing, there won’t be much difference between the two. Are financial advisors useful? Do you know that many people can have assets of more than $1 million and still receive an age pension? Many people over 50 can earn $91,000 per annum and pay a maximum of 15 per cent tax. You can also draw out some super if you are over 55, even if you are working. How do you manage that redundancy payment, or get a health care card? Can you manage capital gains tax on that rental property you sold? Is your small business in need of some TLC, perhaps a creative mind can help. The ongoing nature of financial advising provides the opportunity for continuous financial improvement, whether through investment or through structural means. Like a GP, personal financial professionals will call in expert help when needed, but the primary relationship will be with the generalist.

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 investing, fees, superannuation, financial planning, accounting, insurance.