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Choosing a financial planner

What is financial planning?

07 February 2017

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.

Regardless of your age, life stage or wage, a financial planner can work with you to reach your financial and life goals, whether short-term or long-term. This article offers an introduction to what financial planning is, how it works, and how it can benefit you.

What is financial planning?

Financial planning is about developing strategies to help you manage your financial affairs and meet your life goals – and the first step is to make sure you have access to the right advice.

If you could achieve your financial goals by simply putting money away in the bank, you wouldn’t need a financial plan. Unfortunately, life is a little more complex – it’s hard to understand the intricacies of investment, taxation and ever-changing rules and regulations, so you need professional help.

Yet many of us resist seeking advice, as if our financial future weren’t just as important as our health or our children’s education. We often decide to manage our financial affairs ourselves, or leave it to a family member or friend, which is a bit like asking your butcher for advice on vegetables.

Many people make the mistake of thinking that financial advice is just for the wealthy. However, financial advice can help people at all levels of financial health by providing strategies for improving and growing your wealth. It can assist you with making plans for things as simple as a holiday, to something as complex as buying a property, or retiring comfortably.

Why should I use a financial planner?

FPA research1 has found that Australians who consult a financial planner feel happier, more positive about their financial wellbeing, and more optimistic about the future than those who don’t.

That’s because a financial planner will help you stay on track of both your short-term goals longer-term goals. The sooner you start planning, the sooner you can build the life you want, and live with better peace of mind.

Financial planning is a specialist profession and you should make sure that you’re getting advice from a professional financial planner who is properly licensed and qualified.

A financial planner has the technical expertise to develop the right strategy for you. They will know the latest legislative changes and ensure you feel financially informed and confident about your future.

When will I need financial advice?

Most people seek advice from a financial planner when they hit major life milestones. This will depend on your life stages. These include:

Young to mid-life: Those aged 20-39 who are establishing and building careers, launching a business or perhaps starting a family. You may be looking at getting married or buying your first home.

Mid-life: Those aged between 40-49, this is your consolidation stage – where you aspire to achieve a comfortable lifestyle and are thinking about managing your long-term future. You may be looking at investments, inheritance, tax management and healthcare.

Pre-retirement: With 20 or more years of retirement ahead of you, your priorities will depend on how well you’ve prepared. Your main concerns may be debt elimination, protecting your assets, helping your children, wills and trusts.

Retirement: Generally from 65-years and onwards, this is the time to indulge in hobbies or travel, enjoy your family and prepare for transferring your wealth. You may be thinking of aged care planning, gifting to your family and estate planning.

While it’s important to have professional financial advice to help you through these events, you don’t need to wait in order to benefit from establishing a relationship with a professional planner.

As Dante De Gori, CERTIFIED FINANCIAL PLANNER® professional and CEO of the FPA, explains: “It’s all about helping you set your goals and devising a plan to give you the confidence that your financial future is secure. A professional financial planner can give you the peace of mind and security that comes with being prepared for the future.”

How do I identify my financial goals?

People often turn to a financial planner to help simplify their finances and set financial milestones to help them achieve their life goals. These goals can include paying off a student loan, a mortgage and short-term debts, such as credit cards, through to saving for a holiday, investment or retirement.

A financial planner can help you with budgeting, cash flow management, a savings plan, superannuation, tax planning, home loan repayments, debt management and reduction, insurance, investments and also planning for retirement.

Your financial planner has a responsibility to provide the best possible financial advice for your situation. Ask him or her “how will you help me to reach my goals?”

Your financial planner’s responsibilities are to make clear recommendations, outline the risks involved and communicate any possible strengths or weaknesses in the plan. Remember that your financial planner cannot predict the market or ensure investments are always favourable.

What does a financial plan include?

Every individual or household is unique and requires a unique financial plan. A good financial planner will review your lifestyle and create a financial plan specifically suited to you. The financial plan will include financial strategies that will meet your goals. Once you’re satisfied and agree to the suggestions of the financial planner the financial plan will be put into action.

How do I find a financial planner?

The Financial Planning Association (FPA) is the professional body for financial planning in Australia, representing over 12,000 members. To be a member of the FPA, financial planners must have more experience, commit to ongoing education, as well as high professional and ethical obligations. FPA members are also committed to a code of ethics and higher standards than required by law.

You can find an FPA member with our Match My Planner tool.


1 FPA Investment Trends research: Investment Trends 2014 Advice & Limited Advice Report