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Financial Planning

Don’t fall for it – who can you trust with your money?

02 April 2018

Man leans his head on his arm and sits in outside doorway after failing to trust his money

Money & Life team

Money & Life contributors draw on their diverse range of experience to present you with insights and guidance that will help you manage your financial wellbeing, achieve your lifestyle goals and plan for your financial future.

Opportunities to make your millions can come in many guises. Maybe you’ve been tempted to jump on the Bitcoin bandwagon or find a surefire way to become rich overnight. But it’s very important to fully understand the risks involved and seek sound advice before handing over your cash.

In early 2018 the media has featured many headlines about the rollercoaster ride many investors are having right now, thanks to sharp falls in both Bitcoin and equities markets. At the same time, Western Union have been inviting people to apply for compensation for money lost to scammers between 2004 and 2017. All these stories highlight how vulnerable we can be to news of the next big money-making opportunity, whether it’s legitimate or not. So when is it safe to take the plunge and hand over your money on the promise of becoming richer?

How scams succeed

In Australia alone, more than $5 million each year is reported lost to scams, according to the Australian Competition and Consumer Commission (ACCC)1. And the real figure is likely to be much higher as many people are too ashamed to report their loss. “Victims are often so shamed at falling victim that they are unwilling to share their story with others, leading them to internalise their shame,” says Suli Malet-Warden, counsellor for IDCARE, a not-for-profit support service for Australian and New Zealand victims of cyber crime and identity fraud.

Maybe you’ve seen some of the more common scams first hand – a fraudulent threat of legal action from the ATO for example or the offer of a brand new car in a prize draw – and been savvy enough not to fall for it. But when there’s the promise of a big payoff – or in some cases a big penalty – we all need to be careful about letting emotions take over and hijack our brain into making poor decisions.

Keeping your wits about you in money matters isn’t just important for dodging scams. When it comes to making make better financial choices about things like borrowing, investments and super, many of us think there’s room for improvement. Results from the FPA “Living the Dream” report released in August 2017 show that poor decisions are the second biggest financial regret for the 2,635 Australians surveyed.

Professional vs personal advice

So where do we go wrong in making smart decisions about money? Darren Withers, CFP® and Head of Strategic Advice for Elston, has more than 20 years’ experience in financial planning. During those two decades he’s learned a great deal about how people often end up regretting investment decisions based on personal advice from friends or family members. “If you had serious health issues or a tricky legal problem, would you simply rely on advice from your neighbour or cousin?” says Darren. “No, most people would seek out an experienced doctor or lawyer for help. Yet studies show Australians are twice as likely to seek financial advice from family and friends, compared with professional advisers. Working with a professional CFP® financial planner can add significant knowledge and experience to financial decisions, that most of our family and friends cannot.”

Jumping on the bandwagon

Family and friends aren’t the only ones who can plant ideas in your mind about money-making schemes. Whether it’s a hot stock tip or the buzz about Bitcoin, we’re exposed to many stories about get-rich-quick solutions through all sorts of media channels. When we feel like we’re missing out on an easy and obvious way to make our millions, we can be really vulnerable to sinking money into something that’s risky and we don’t know much about. “As humans, we naturally follow what appears to be the consensus view for fear of standing out, or indeed, missing out and this can lead to poor decision-making,” says Darren. “Investors need to ignore the fads and last year’s best performer and instead look for where the best value lies over the long-term.”

Cutting out the noise

So is there any easy way to sort out fact from fiction and discover the right investment opportunities for you and your circumstances? Advice from a CERTIFIED FINANCIAL PLANNER® professional is certainly one way to develop an investment strategy to move you towards your own personal and financial goals. But grasping some key investment concepts – around your timeframe, goals and balancing risk and return – will help you start to see what positive and successful investment choices are all about.

Looking for ways to grow your wealth for a secure financial future? Get expert advice on investment options and discover just how much of a difference financial advice can make to your future wealth.


1ABC News, Western Union scam victims urged to seek compensation from $US586 million fund, David Chau, 23 January 2018, “Over $5 million is reported lost each year to these scams but this is just the tip of the iceberg as many victims don’t contact us,” the ACCC’s acting chairman, Michael Schaper, said.