The end of financial year is approaching fast, and this year many people have things to deal with they may not have dealt with before. It is vital that you get the service providers you need sorted, especially this year as Financial Planners, Accountants and Financial Counsellors are frantically busy dealing with the normal end of financial year challenges, as well as the extra work caused by the Pandemic.
Regardless of Covid 19, June 30 will arrive and once that date hits, the chances for many tax minimisation strategies will be gone. Many planners and accountants will not be taking on new clients close to June 30 this year, as they are just too busy with their existing clients, and there are over 5,000 less financial advisers this year than last year.
It is common on social media to see someone asking for recommendations for a financial adviser, and then people very helpfully making their suggestions.
However, quite often the referred person or company is actually a mortgage broker or accountant, and frequently the person asking for the referral doesn’t know exactly what they need either. This is not surprising, considering there can often be quite a bit of crossover in these professions. Some companies or individuals perform more than one role, and many well-meaning referrers do not know exactly who is supposed to do what anyway.
Please note that there are strict licensing rules around the professions, however just because a practice mainly does one role, it doesn’t mean they don’t have multiple licenses and professions in their practice, and quite often with individuals having multiple licenses.
So here is my breakdown for you.
An assistance service for people who are in financial difficulty. Mostly government funded and generally accessed via local organisations and agencies. A financial counsellor will provide information, advice and advocacy to people in financial difficulty, often related to debt and falling behind on bill payments and debt payments.
They will usually help with prioritising debts, developing budgets, accessing grants or concessions, negotiating with creditors, access dispute resolution services, and understanding of rights and access to legal help if necessary.
At different times there can be different waiting times to see a financial counsellor, so you should get in touch as soon as you think you might need this service, and not leave it to the last minute.
Financial Adviser or Financial Planner
This is the service for people who are not in any real financial difficulty. You may be doing really well, or believe you could be doing really well if you knew more. You do not have to be rich, and you do not have to be organised before you see a financial adviser. However when you find a good adviser, the specialist knowledge that that they have can usually make people way better off over the long term, even after you pay fees.
A financial adviser can usually help you with budgeting and cash flow, investing and superannuation, debt reduction strategies, taxation minimisation strategies, personal insurance, Centrelink planning, retirement planning and many other areas. Some financial advisers focus on business planning as well as personal financial planning, and some focus mostly on Insurance strategies.
You pay fees to a financial adviser, they do not get paid or subsidised by the Government, and they do not get kickbacks from product providers anymore (some did in the past). Your fees should pay for services that help you to become more financially literate, make the most of your financial opportunities, and keep you on track. You should see value in your improved financial position after receiving advice, and also in your confidence. Most financial advisers will provide you with an ongoing service option so you keep up to date with all changes and opportunities, and have someone to call on if things go wrong.
Some financial advisers are also Mortgage Brokers and/or Accountants, however remember that all financial advice must be provided in writing.
Most mortgage brokers assist their customers to find and apply for appropriate home loans, and some brokers will also assist with business property finance options. Some also help with vehicle and equipment finance. They have expert knowledge of what finance providers need you to have in place prior to approving loans and should provide you with choices once they establish your options based on your personal situation and preferences. Whilst budgeting is now a large part of mortgage broking and most brokers help with this, it is generally a secondary role rather than the primary function of what they do.
There is an increasing trend for mortgage brokers to charge a “fee for service” to the client, however it is still common for brokers to be paid by the financial service provider of the loan they help you to apply for. Most brokers focus solely on Mortgage Broking, however there are some who are also licensed to provide financial planning services.
Accountants have a different role again, being predominately focused on taxation matters. However this covers a broad range of services, including tax return preparation and lodgement for everyday employees, business taxation, business structure planning and advice, tax minimisation advice for businesses, and business planning and management services, Self-managed Superannuation Fund taxation and auditing services, and setting up and assisting with Trusts and Companies. This is not an exhaustive list, and other services are also offered by Accountants.
Accountants usually charge an invoiced fee for the services they provide, and are paid by their clients, generally in direct relation to the amount of work they do for that client. Some Accountants also charge businesses a monthly flat fee that incorporates all the services they provide.
Whilst there can be crossover with Accountants also being Financial Advisers or Mortgage Brokers – the services each provide are different, and in general Accountants cannot provide Financial Product advice or Investment advice.
So which do you need?
That depends on the services you need. By the time most individuals get to adulthood they will need at least one or all of these services at some time. Ideally the services work together covering their own areas of expertise, but complementing each other with strategic information that assists you to get the most out of each service. You should ask each provider what areas they specialise in, and find someone who is best at the area of advice you need.
There are good and bad service providers in every profession, and when financial rules and regulations change so often it can be hard to know if you have a good provider or not.
If you need help with working out which service you need, how they all work, and whether you are getting good value for your services, contact Insider Out – Understand and Trust your Advice.
Adv Dip FS (FP)
Insider Out – Understand and Trust your Advice
0400 533 865
This information may be regarded as general. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any information we have given you, having regard to your own objectives, financial situation and needs before acting on it.
I am no longer authorised to provide financial advice. If you wish to receive financial advice you must contact an authorised provider.