Wiley Corporate Logo

Top Navigation

Financial Planning Tips: Advice or DIY?

helpful tips for financial planningThe DIY approach

If you are taking the DIY approach, there are a multitude of ways to learn about various subjects, and many are free. Seminars, webinars (seminars on the internet), free information packs, websites, magazines and newspapers will provide valuable information. The more you read, the more you will learn, and you’ll find certain providers, authors, companies and philosophies that match your own way of thinking and investing.

The most important piece of advice I can give you is to never sign up for anything at a seminar, because emotions will sway your decisions and spruikers are highly trained in raising your emotions and expectations. With any of your investing or educational activities, take your time, consider the facts and do your homework before you commit to any contract or agreement with a company. Always read the information about the product, such as the product disclosure statements (PDSs), including the small print. If you can’t be bothered reading the PDS you shouldn’t invest in the product. Ask yourself, what’s in it for them? How do they make their money? What is their motivation?

You should look for philosophical and fiscal alignment with any company or fund you invest with: any company you deal with should have your best interests in mind. For example, if a Queensland property developer just sells property on the Sunshine Coast or Townsville, then their chief motivation will be to convince you that this is the best area to invest. However, you will have a choice as to where to invest and that choice is far and wide. Do your research and make sure you understand the consequences of committing to a contract of any kind.

An independent legal opinion can be a valuable investment. It always surprises me how valuable some of the free information available to you can be. The opposite is also true, but I often find that investment magazines are extremely helpful in providing education about certain strategies or topics, and they illustrate their points well with examples or case studies that the readers can directly relate to.

I have been writing for Money magazine for many years, and I know that it is a good example. Its direct competitor Smart Investor is equally, good, and many of the property magazines also have extremely helpful articles and case studies. However, property magazines appear to be full of advertisements from spruikers of all types, so be cautious: attend a free seminar or webinar, but do your homework and exercise great prudence before you make any legal commitments.

Working with professional advisers

Many professionals also provide an array of different services to help clients like you—solicitors, accountants, financial planners, stock brokers, mortgage brokers, real estate agents, insurance brokers and many more. If you do seek help make sure you clearly articulate your needs, goals and objectives to your chosen professional. Call me cynical, but even professionals can revert to the ‘what’s in it for them’ scenario, where they may be too enthusiastic to sell you a product or service that serves them well but is not necessarily the ideal outcome for you.

Keep focused and communicate clearly when working with professionals in any field. It’s no different from working with trades people. You need to check licensing, credentials, association memberships, as well as seek referrals and get to know and trust them before making a commitment. A good place to start for financial advice, for instance, is a website called Money Smart (www.moneysmart.gov.au) to check licensing and complaints against financial services license holders.

The other word of caution is about scams. With the advancement of technology comes the ability for criminals to invent more and more elaborate means of defrauding you of your money.

The naive and trusting need to be very vigilant. A large proportion of people who are defrauded are elderly people, and many don’t find out they have been defrauded until some time after the crime was committed. Please be aware and as I always say, ‘There’s never a silly question when it comes to your own money’, so make sure you ask lots of the right types of questions when seeking financial advice. The Money Smart website has a sample list of questions to ask when you sit down with an adviser or salesperson.

Financial planners help you to achieve your goals and objectives; accountants may help with cash flow and tax; your super fund will help with saving for retirement in the most tax-effective way; a mortgage broker may help with property purchases and loans; solicitors, with estate planning; and insurance brokers with risk management and life insurance. There are also plenty of companies that can help with all of the services listed on the diagram. Sometimes using someone who can do all of these things is helpful, but just be careful of jack of all trades, master of none. You may be more likely to find the full array of services at larger firms that have many advisers and offer multiple services.

 

 

This article is an excerpt from The One Page Financial Plan: Everything You Need to Successfully Manage Your Money and Invest for Wealth Creation by Sam Henderson (Wightbooks; April 2013; ISBN: 978-1-118-58849-9)

 

  • It is important to be educated about all the financial services available to you and pick the one that is unique to your situation. Thanks for sharing this advice!