Everything You Need to Know About Financial Advice

What is financial advice?

Financial advice means different things to different people. Some say it means investment advice while others say it means tax strategies, or help with budgeting or even advice on buying insurance.

The reality is financial advice is all of these things. This is because financial advice is a broad service with an underlying purpose to help us take control of our finances and make sound financial decisions. And because different people aspire to different things and have different personal circumstances, financial advice will help us in different ways.

How financial advice works

Many people have a gap between where they are today and the lifestyle they would like to enjoy. This gap can create a feeling of uncertainty. Financial advice helps you bridge that gap.

It does this firstly by understanding your needs and objectives and giving you a financial plan. This plan is based on your particular lifestyle goals and personal situation.

Your financial plan is designed to create prosperity and is supported by four pillars.

  • Saving – gives you the money to create wealth
  • Super – provides money for life after work
  • Investing – makes your money work for you
  • Protection – manages the risks to your plan

With these four pillars in place, you have the building blocks for future prosperity.

A guide for your journey

Building a financial plan might sound simple enough, but in reality it can be quite complex.

Our financial environment is forever changing as are our personal needs and priorities. And the financial tools available can be technically challenging to understand.

That’s why it’s important to have a guide for your journey. Your financial adviser should be a long-term partner who helps you realise your financial and life goals. So choosing the right one is important.

To be legally qualified to guide you, financial advisers must work for or represent a financial advisory business that holds an Australian Financial Services Licence (AFSL). This means that they are recognised by the Australian Securities and Investments Commission (ASIC).

All the formal information you need to know about an adviser will be contained in the financial services guide (FSG), which will be provided at the first meeting.

Why choose a Charter Financial Planning financial adviser?

As a Charter Financial Planning financial adviser I am supported by one of Australia’s oldest and most respected financial advice organisations. This gives me access to opinions of experienced market analysts and ongoing day-to-day support. I also have access to a broad range and thoroughly researched choice of approved investment and insurance products and am subject to audits and accreditation. This all adds up to ensuring you get the best financial advice possible.

You’ve made an appointment to see a financial adviser. What happens next?

By making an appointment to see a financial adviser you have taken an important step that will help you take control of your financial future. This is what happens next:

  • At your first meeting we will give you an FSG. This document contains vital information about our range of services, our qualifications, how we operate, deal with complaints, the relationships and associations we have and all fees and charges.
  • We will ask questions about your financial circumstances, life goals and attitude to risk. You will also be asked to complete a detailed questionnaire. This is considered the cornerstone of good advice so be prepared to answer questions by providing full and factual information and by taking along all relevant financial information. All the information you provide will be kept confidential.
  • You will be asked to sign an agreement authorising us to construct a financial plan on your behalf.
  • We will then make an initial assessment of the information you give us and use this information to project different financial positions based on different strategies. This is all done to help you understand how feasible your goals are and any trade-offs you may need to make.
  • After our initial discussion and the information you have provided we will devise a financial plan, including a set of recommendations for implementing the plan.
  • You will be invited back for a second meeting where we will present the financial plan, including recommendations for implementation. At this second meeting we will discuss the plan and how you see it working.
  • At the end of your second meeting if you agree to proceed, we will implement your financial plan and design a review programme. You will also need to sign a service agreement.

Fees and charges – what to expect

All fees and charges will be discussed and agreed upon before we proceed with any financial advice. Fees and charges can be paid in a number of different ways. The most common are:

  • A one-off up-front fee based on the amount you invest and the amount of insurance premium you buy.
  • A one-off fee for service. This can be a flat fee or it can be an hourly-based fee.
  • An annual fixed fee.  Each year you will be charged a fixed fee which increases with CPI.
  • An annual asset-based fee. Each year you will be charged a small percentage of the amount you invest. Asset-based fee rates can vary between different financial products.

In some instances, depending on the type of advice that is provided, a combination of these fees may be charged. What’s most important is that you are clear about the charges. You should know and understand how you will be charged for our time and advice.

Because of this we are very happy to disclose our fee structure up-front and you should feel comfortable to ask us any questions you might have.

A more detailed outline of all our fees will be provided in the FSG (given to you at the first meeting) and will be re-confirmed when a financial plan is established on your behalf.

Stay in touch with your financial plan

Our lives constantly change. We get married, divorced, have children and go through other life changing events. All these things can have financial implications. When they happen they need to be factored into your financial plan.

The financial environment is also changing. Governments regularly make changes to the legislative, regulatory, economic and tax environments and these changes can have financial implications for us. On the positive side they can also provide us with financial opportunities.

A financial plan maps out your lifelong financial journey. To stay relevant it needs to be regularly reviewed and if necessary updated.
Many financial advisers will, when you first meet with them, establish an agreement to review your financial plan on a regular basis just to make sure you stay in touch.

What happens at review time?

Sometimes your personal and financial situation will have changed a little, while at other times more significant changes may have occurred. During the review the adviser will determine the significance of these changes and advise you if a full or a limited review is required.

At the review of your financial plan your financial adviser will also:

  • update your personal details and current circumstances
  • check the relevance of your plan’s current objectives
  • re-weight the investment strategy in line with your risk profile and asset allocation
  • check that your plan’s existing strategy remains appropriate and if not, change it, and
  • check that your plan’s asset allocation remains suitable.

Important information

This information has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.