Many retirees don’t understand their superannuation options and are potentially missing out on thousands by not getting the financial advice they need. And they’re robbing themselves of their best possible retirement in the process, says financial adviser comparison group Adviser Ratings.
It’s understandable that the average person doesn’t fully grasp the complexities of the superannuation system, which is why financial advisers play such an important role.
But figures from the Australian Securities and Investment Commission (ASIC) show the country is in the grip of a financial adviser shortage, with almost half of all advisers in Australia leaving the profession since 2019.
The shortage has led to the remaining advisers spreading themselves thin among many clients, causing some to adopt a ‘one size fits all’ approach to advice.
Paul Moran, principal of Moran Partners Financial Planning, told the Australian Financial Review that is a flawed approach that will lead to poorer outcomes for retirees.
“Average punters have no idea about how retirement income works,” he says. “They understand saving for their retirement but are not sure how they get an income.”
There are myriad decisions that need to be made before retirement, including long- and short-term investment strategies, the role the Age Pension will (or won’t) play, whether to use private savings and even what to do with the family home.
All are big decisions, with potentially big consequences for your bottom line.
Unless you plan on getting a finance degree in the next few years, you’d be smart to invest in the services of a financial planner for help with these decisions. So, how do you find the right one who won’t give you the ‘one size fits all’ approach?
A good place to start is the ‘find a planner’ service offered by the Financial Advice Association of Australia (FAAA). The online search function allows you to narrow your search by location.
Before contacting any adviser, check they are qualified and licensed to actually give financial advice. You can check this with ASIC’s financial adviser register.
Most financial advisers offer a free, no obligation initial consultation. Definitely take them up on this and try to visit at least three advisers on your shortlist.
Prepare some questions ahead of time for these consultations. You’ll hopefully already know their qualifications, but SuperGuide says questions like these can give you a better idea of the quality of adviser you’re dealing with.
What/how do you charge?
Advisers may be reluctant to tell you their fees up front, but it’s important to get it out of the way early. Advisers will charge on a fee-for-service basis, a percentage of the amount you invest, or a combination of both.
There are usually fees for preparing an initial statement of advice (SOA), fees for implementing advice, and fees for ongoing monitoring and review. Ask for a breakdown of all fees and charges.
How are you paid?
This may seem like a rude question, but the answer can potentially cost you millions. Are they on a fixed salary or do they receive bonuses or other incentives for selling you products?
Can you advise me on my existing investments?
Most of us have money in super and many will also have money in shares or other outside investments.
A good adviser should be able to advise you on how to maximise profits from your existing investments, and not just from products they recommend.
Be wary of advisers who try to sell you in-house products from the bank or parent company who employs them.
Have you used a financial adviser? What was your experience like? Let us know in the comments section below.
Also read: Tens of thousands of older Australians ‘gifting’ the tax office hard-earned funds
