Seeking financial advice is a question of value

BATTERED by the banking royal commission and years of negative publicity, financial advisers are doing it tough.

Their value is being questioned more than ever before, but even the critics say a good adviser can benefit the right clients. And new research has put a price on that value.

Tania Tonkin, director of dmca advisory, said it might be tempting to rely on family members and robo-advice for financial help, but some money matters were too complex to leave to “broad brush planning”.

Superannuation strategies for retirement, investment planning and coping after a divorce were examples, she said.

“It’s a pity the Hayne inquiry (royal commission) has cast all financial advisers in such a poor light,” Ms Tonkin said. “They are not all the same.

“You need to find someone you trust with the right qualifications – possibly part of a wider advisory firm that includes accountants and specialist advisory experts.”

A new analysis by Russell Investments found that quality financial advice could add 4.4 per cent a year to an investment portfolio in areas such as taxsmart planning and addressing investors’ behavioural mistakes.

Russell Investments

MoneysaverHQ editorial

GOOD SIGNS

An adviser is upfront about costs.

No pressure to do anything you’re unsure about.

Takes time to understand your full situation.

Member of a professional organisation such as the FPA. Australia managing director Jodie Hampshire said this “far surpasses the typical amount charged in adviser fees”.

“What the negative publicity around the royal commission has missed is that the vast RED FLAGS

Being pushed into particular products. Pressured into acting quickly. Suggests get-rich-quick strategies.

High-risk investment recommendations even if you don’t like taking risk. majority of advice clients benefit from quality advice,” she said. “We believe financial advisers have never been more valuable in Australia – perhaps, at a time when the perception of their value proposition is at its lowest.”

Ms Hampshire said there were worrying signs in financial markets, and while advisers could not control markets they could help clients to make rational decisions.

Separate research by Sunsuper has found that more than three-quarters of people believe the advice given to them provided peace of mind and helped them prepare better for retirement.

Author and Sky News Australia host Annelise Nielsen travelled the country covering the banking royal commission and has examined the financial advice industry in her new book, Money Spinners.

Ms Nielsen said taking your time to increase your own financial literacy was often more useful than paying an adviser for their opinion.

“For most people a personal financial adviser won’t be necessary and will likely cost you more in fees than you’ll see in returns,” she said. “But for those who earn over a certain amount, and especially those who accumulate a lot of money in superannuation, they can be worth their weight in gold.”

Ms Nielsen said advisers were unlikely to tell clients they didn’t require advice. “Sometimes all you need to do is leave everything as is, but there’s often little incentive for an adviser to say ‘do nothing’,” she said.