Wondering what a financial advisor actually does? You're not alone. Many of our clients are unclear on the basics initially, but we’re happy to break it down!
There are some things about the financial planning industry that we take for granted, but which can be confusing for clients. Such as:
What is the difference between a financial advisor and financial planner?
Sometimes there isn’t one. “Financial advisor” is a broad term that refers to a professional who is qualified to advise you on your finances. We are financial advisors. Like all reputable financial advisors, we are members of the Association of Financial Advisors (AFA).
Financial planners, however, must be certified by the Certified Financial Planner Board of Standards, Inc. This is why you often see a registered mark after their designation (CFP®). They are usually members of the FPA (Financial Planning Association). Therefore, a financial planner is a type of financial advisor that helps companies and individuals meet their long-term goals.
In Australia, the only people permitted by law to give you personal finance advice work for a financial advisory business which holds an Australian Financial Services (AFS) licence. At IAS, we have our own AFS License.
What can a financial advisor do for you?
A financial advisor gives you the strategies you need to achieve your financial goals both short and long-term. They provide specific advice on superannuation, insurance and managed funds, and basic banking products. Financial advisors often work closely with your accountant or can suggest an accountant for you if you don't have one.
Advisers help you sort out your financial goals and work with you to develop a plan to achieve them. Working with an adviser helps you turn thought into action, especially if you tend to put things off.
What do you need to know when selecting a financial advisor?
It’s important to figure out if their advice is non-conflicted. Meaning, is the advisor offering advice that they genuinely believe to be in your best interests given their professional expertise? Or, are they representing a large financial institution with their own products for sale?
Insurance Advisory Service is 100% non-conflicted. We are not bound by any product or group of products and so we can assess and advise freely. Our clients get objective advice and recommendations based on our experience and knowledge, not our relationship with a product or insurance provider.
How do you find the right planner for you?
There are different types of financial planners. A good question to ask is, ‘What is your approach to financial planning?’ Make sure the planner's investing philosophy isn't too cautious or aggressive for your needs. Also, learn how they will carry out recommendations or refer tasks to others.
It's important to make sure an advisor is a good fit for your individual financial situation. Some financial advisors prefer to work with clients whose assets fall within a particular range.
When is the best time to see a financial advisor?
Advice is helpful in times of change. It is most valuable when you're going through a big life event, such as starting a family, being retrenched, or managing an inheritance. It's also great for less immediate goals, such as growing your super or planning for retirement.
The type of advice you need will depend on your life stage, the amount of money you have to invest, and the complexity of your affairs. It’s essential that you protect your family in the event that you are not there or if you become unable to provide an income. A financial advisor can make sure you have the right plans, products and strategies in place to protect your financial future.
For more information or advice call us on (02) 8268 2900 for an obligation-free chat.