It would for easy for those Australian’s who haven’t received financial advice before to not appreciate its advantages. On top of providing advice, Financial Advisers are passionate about educating people on the benefits that financial advice offers. What you may be surprised to know is that financial advice goes beyond just monetary benefits. In addition to growing your wealth, financial advice will help clarify other important questions such as:
- Will I have enough income to live comfortably in retirement?
- Will my family be financially secure if I can no longer work?
- What will happen to my assets when I pass away?
- How can I pay off my home sooner?
- How can I make my money work harder for me?
- How can I maximise my entitlement to government benefits?
Aussies may be reluctant to seek advice due to misconceptions about what financial advice is and its benefits. Recent research published by IOOF identified several misunderstandings that people have about financial advice:
- My situation is not complex enough to justify getting advice.
- Advice will cost me more than the value it provides.
- Advice is just about making money.
- I can do this myself, so I do not need advice.
- Advice is only for people who are older and wealthier.
The research further identified that people who had a Financial Adviser were significantly more comfortable with their financial situation compared to those who didn’t. 88% of those 11,615 surveyed who had a Financial Adviser said they had improved mental and physical health, a better social life, and less worry and stress in their lives. From a financial perspective, 96% said financial advice helped to get the most out of their situation, 91% said it helped them avoid pitfalls and mistakes, and 90% said it left them in a better position financially. In summary, seeking financial advice provides the potential to increase a person’s overall quality of life.
Value means different things to different people and can be very difficult to quantify. A study conducted by Russell investments has helped to unpack and quantify the financial benefit a person may receive from seeking financial advice, they have developed the below evidence-based calculation:
| Value Drivers | Calculation |
| Avoiding behavioural mistakes | Based on your investable assets x 2.2% |
| Tax aware investment planning | Based on your before-tax income x 1.5% |
| Asset allocation | Based on your investable assets x 0.9% |
| Avoiding excess cash | Based on your investable assets x 0.5% |
| Debt management | Based on your debt x 0.5% |
| Increased savings ratio | Based on your after-tax income x 5% |
Based on a client who earns $70,000 per annum with a super balance of $300,000 and a mortgage of $200,000, it is estimated that the total financial of benefit of them seeking advice is $18,794 per annum.
Any general advice in the publication has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice in this publication, you should consider whether it is appropriate to your individual circumstances. Please seek personal advice prior to acting on this information. References – IOOF, The True Value of Advice research paper (2020) and Russell Investments, Value of an Advisor study (2020).
Damian Gibson, Partner & Financial Adviser, Elevate Wealth
