What do financial planners actually do?

by Melinda Houghton | Jul 6, 2019 | Financial Advice, Uncategorized

I worked as a Financial Planner (or Adviser) from 2005 – 2019.  When people asked me what I did, and I told them “I am a Financial Planner” there were a few common responses.  Most commonly – “Oh, I need one of those”.  Second most commonly – “What do you actually do?”

There is a perception that financial planners only help rich people get richer, which always intrigues me.  If people are already rich, are they the ones who really need advice?

Financial Planners take on many roles including Research, Advice, Strategy, Guidance, Encouragement, Goal Setting, and assisting people to achieve Peace of Mind or what I like to call “Financial Relaxation”.

The areas they work in include:

Superannuation, Investment, Personal Insurance, Retirement Planning, Pre-retirement planning, Estate Planning, Budgeting, Savings Plans, Centrelink Maximisation, and Taxation Minimisation.  Most importantly, they work with people, and to summarise here is what they should do:

Minimise financial risks, and maximise financial opportunities

One of my former clients asked me to tell her story, in order to communicate some of the things that we do better than any financial planner is able to.  Many thanks to Amanda for sharing:

“We weren’t wealthy, we didn’t have savings or investments. My husband’s company was taken over and they said they were going to put off a lot of workers. He had been working there for 12 years. We had teenagers, a mortgage, renovations, all the usual expenses that families have. Our wages didn’t cover our costs and we were hoping we would breathe again when the kids finished school.

We saw Melinda and she organised our finances and affairs so that we were protected if the worst happened. My husband was one of the lucky ones and kept his job although he took a substantial pay cut. 50% of his fellow employees were made redundant.

We thought we were over the worst of our financial difficulties, our youngest son finished school and we were finally in a position where we could pay off our credit cards, landscape the garden and plan our first family holiday in years.

Then my husband was diagnosed with cancer. One visit to the doctor, a CT scan, he was in and out of hospital, more tests, trips to specialists. The cost of treatments and special medications was unbelievable, one cancer tablet cost $4,000 per month! He couldn’t drive because of the medications he was on and I had to give up work to care for him, around the clock.

We had insurance. Melinda had put all that in place. We were able to go on knowing that the cost of treatments, therapies and loss of wages was covered. After a few weeks my husband was given a terminal diagnosis and with the support of our local palliative care I was able to care for him at home until he died.

I still had a mortgage and debts, no regular income for nearly a year, was unemployed and grieving and the renovation on our house was incomplete. The whole way through our experience Melinda handled the paperwork and helped us in any way she could.

After the estate was settled Melinda organised everything again so that I could return to study with a regular income from investing my husband’s superannuation and Life Insurance proceeds. I have been able to pay out the mortgage, engage a builder to finish the renovation and help the kids along with their Uni studies. All the way through, because of the best financial advice, I have been able to make choices based on what was the best possible for our family.

You can’t predict what will happen in life. You can’t see into the future and you never think the worst could happen. But you can organise your affairs with the help of a good financial planner so that if things go wrong you have choices and options. I’m still not wealthy. But I’m so glad we take Melinda’s advice.”

Amanda

Everyone has opportunities to minimise financial risks and maximise financial opportunities.  With constant changes to legislation, financial markets, world events, and your own personal situation it is essential to refer to a financial specialist who is experienced and up-to-date.  I no longer provide advice myself, however I still want to help people get good advice.

Melinda Houghton

Adv Dip FS (FP)

Insider Out – Understand and Trust your Advice

 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.

https://www.moneysmart.gov.au/investing/financial-advice/financial-advisers-register

All financial planners drive mercedes

by Melinda Houghton | Jul 6, 2019 | Financial Advice, Uncategorized

There are a lot of myths and fallacies surrounding Financial Planners.  However the profession has changed.  A lot.  And it is essential that consumers know what is true now.

Here is some of what you may hear:

All financial planners drive Mercedes.

There are always hidden kickbacks and costs.

My aunt/uncle/brother/friend/taxi-driver saw a financial planner and got ripped off.

But I don’t have enough money to see a financial adviser.

Whilst every profession has their issues, and financial planning has certainly had theirs, if you do your due diligence (check them out) you should be able to find a planner who is willing and able to offer you a quality service, where you pay a fee for your advice, and achieve an outcome that is both in your best interests, and will help you achieve your goals.

There is still a lasting legacy of thinking that if you want to work with a financial planner, you need to be rich first.  Kind of like cleaning up your house before the house-cleaner comes.  Good Financial Planning is changing these perceptions and opening up life-changing financial opportunities for thousands of Australians.

So how do you find a good financial planner?  Consider these things:

1. Authorised to provide Financial Advice in Australia (so not a Mortgage Broker, Accountant, Real Estate salesperson, Banker or someone at a BBQ).
2. Qualified and experienced.
3. Not linked to a large financial institution (unless you want to buy that institution’s products).
4. Member of a professional association with a strong code of ethics, e.g. FPA, AFA
5. A provider of strategic, holistic or relevant advice that cares about your goals and objectives, and they are focused on you and not themselves.
6. They are good listeners, you like them and you think you should be able to work together.
7. They know what they are talking about, and have empathy and understanding of your situation.
8. They are used to working with clients in your situation (whatever that situation is).
9. They are recommended by someone you know (who has used their services).
10. They clearly explain what services they provide, what you will get out of it, and what fees are payable.

• I’ve worked with dozens of financial planners, some did drive Mercedes, and one drove a Ferrari. (He was very young, and naïve and borrowed a LOT of money to buy it).  The local Real Estate agent has a Lamborghini though, and it is red, shiny and expensive.
• Legislative changes mean that there should no longer be any hidden costs or kickbacks in advice, which is great.
• Someone else’s experience is not your experience, and I can find you dozens of testimonials from people who have had great experiences with their financial planner.
• But do take note, if someone is advertising on the television frequently, they must be backed by someone who makes large profits, and wants you to be another person to help them make more.

There are somewhere around 18,000 practising Financial Planners in Australia (the numbers quoted vary from 15,000 – 25,000.  If they each have an average of 200 clients, and those clients are still with them, then there are around 3,600,000 Australians who know there is something good about financial planning.  What are you missing out on and why?

Melinda Houghton

Adv. Dip FS (FP)

Insider Out – Understand and Trust your Advice

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.

https://www.moneysmart.gov.au/investing/financial-advice/financial-advisers-register

That horrible “B Word” and why you need it

by Melinda Houghton | Jul 6, 2019 | Financial Advice, Uncategorized

You know those mums or dads who you see at school who are relaxed and seem to have it all together? 

The ones who go on holidays with the family, and drive a decent car that doesn’t break down? 

The ones who organise great birthday parties for their kids every year?

Do you ever think “wow, they must have better jobs, or maybe they inherited money or won the lotto”?

Not necessarily.  When I was a financial planner providing advice to everyday people, I saw many families who had it all together, and those who really, really didn’t (yet).  The difference is not necessarily what you expect.  It is not always extra income, or a windfall that helps them seem financially relaxed.  The miracle that helps them is actually that horrible “B Word” – the BUDGET.

The families that take holidays, have money for regular car maintenance, and who can afford to prioritise their families are usually the ones who plan, budget and live within their means.  They don’t just ‘wing it’ and let their finances dictate their lives, they actually take a little bit of time and effort to control their financial situation.

This gives them that relaxed look that you have noticed (but not really understood).  They don’t panic when something goes wrong, they have funds for new school uniforms when needed, and that school excursion you didn’t know about because your child lost the notice.

Can a budget and being in control really make that much of a difference? 

Yes.  It.  Can.

I had clients I worked with for 10 years.  The average two child family, mortgage, regular jobs, regular income.  They had visions of private school, a dream home in the country, and an early retirement.  They lived within their means, and said no to things they couldn’t afford.  They enjoyed eating out (but not every week) and they never used credit cards for regular expenses.  Money was put aside for emergencies, and if that didn’t happen that money was used for extra treats.  They set aside small amounts regularly to help fund their long term goals.  They prioritised their wants because they knew they couldn’t have them all.

Fast track a few years, and they were doing well.  Very excited when dad changed jobs and received a significant pay rise.  Now they could achieve more goals more quickly.  However two years later their finances had stagnated.  Nothing paid off the mortgage, and a credit card debt.  Why?  What happened?

Put simply, they became complacent.  With a lot more income they stopped being careful, and weren’t prioritising their spending.  They spent whatever they wanted whenever.  I asked if their quality of life had changed, was it better?  They couldn’t really say it was.  The extra spending wasn’t making them happier or better off.  But they did have lots more clothes, a new wine collection, and ate out all the time.  Whilst that was nice for a while, their goals were actually education, a dream home, and an early end to working.  When they began controlling their money again, they were moving forward in leaps and bounds.  Their budget was working, and they were happier whilst spending less.

Time and time again we see that it is not how much you earn, but how much you spend and what you spend it on that makes the difference between financial stress and financial relaxation.

It sounds really easy, but many people these days are struggling with something that their grandmothers knew quite well.  You can’t spend more than you have coming in.  It doesn’t work.  If you do that there are dire and unfortunate consequences.

Take some time to take control.  Work out what comes in, and what your basic needs are.  Over and above that are your wants, which you need to choose between if you want to get ahead.  Remember to live for now, but also plan for the future.  Use a spreadsheet, a notebook, or an App, but you have to do it.

This is not optional.  It should be part of your normal way of life.  Your grandmother did this.  It is the only way to become one of “those” families.  Those ones that have it all together.

And if you don’t know how to do it yourself, or need a bit of a push, maybe you need to find the right financial planner to help you.

Melinda Houghton

Adv. Dip FS (FP)

Insider Out – Understand and Trust your Advice

 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.

https://www.moneysmart.gov.au/investing/financial-advice/financial-advisers-register