The idea of entrusting anyone, let alone financial planner, to help you with your finances can certainly get the nerves racing. We’ve all heard the horror stories (yes, even us) about people who have lost their life savings due to dodgy advisors or bad advice.

Thankfully, these stories do not occur as commonly as we are made to believe. For many individuals, the reluctance to see a financial advisor stems from a combination of factors, including a lack of understanding of what financial planners do, fear of exploitation, and concerns about financial security. However a good financial planner can help their clients achieve a range of long-term financial goals.

Let us explore some of the reasons you may be hesitant to engage a financial planner and combat these fears with some reasons you should challenge this hesitation.

One of the primary reasons why people are afraid to see a financial planner is a lack of clarity what it entails and scope of their services. Financial planning encompasses a broad range of services, such as investment management, retirement planning, estate planning, and risk management. Ideally, your financial planner should be working in conjunction with your Accountant to assist with tax minimisation. Without a clear understanding of these concepts, individuals may feel overwhelmed or intimidated by the prospect of engaging with a financial planner.

Another factor that deters people from seeking financial advice is the concern about being exploited or taken advantage of. Scams and fraudulent schemes from dishonest advisors have created a mistrust of financial advisors. However, this really has been a scar of yesteryear when planners were not so regulated and were remunerated by commission in placing your money. These times are now long gone and no longer are planners remunerated in this way.

In reality, there are strict rules and regulations in place, overseen by governing bodies, to ensure financial advisors are making decisions that are in the best interest of their clients. Advisors who do not meet these regulations are subject to significant fines and potentially jail time. Being afraid of being scammed by a financial planner is understandable but can be mitigated by conducting thorough research and selecting reputable, certified financial planners who adhere to strict ethical standards and regulatory guidelines.

A legitimate financial advisor is one who either holds an Australian Financial Services (AFS) licence or is employed by or authorised to represent a business that holds an AFS licence. They should be able to provide this information to you easily. To verify this, you can check the Financial Advisers register on the MoneySmart website.

Likewise, the fear of making poor financial decisions can also deter individuals from seeking professional advice. Whether it’s fear of outliving retirement savings, uncertainty about investment strategies, or worries about providing for loved ones in the event of unexpected circumstances, these concerns can really scare people, so much so that it prevents them from taking steps to secure their financial future. Despite these apprehensions, the benefits of consulting a financial planner far outweigh the perceived risks and uncertainties.

Why should I see a financial planner?

Personalised Financial Strategies

Financial planners work closely with their clients to understand their personal financial goals, risk tolerance, and life circumstances, crafting personalised strategies to help them achieve long-term success. Certified financial planners possess specialised knowledge and expertise in various areas of financial planning, enabling them to provide informed recommendations and guidance tailored to each client’s needs.

Objectivity

Unlike friends or family members who offer well-intentioned but generally biased and potentially uninformed advice, financial planners provide objective recommendations based on thorough analysis and professional expertise, helping their clients make sound financial decisions.

Risk Management

As part of their regulated due diligence process, Financial planners must assess clients’ risk tolerance and develop strategies to mitigate potential risks associated with investments, insurance coverage, and unforeseen life events. By diversifying portfolios, implementing risk management techniques, and recommending appropriate insurance products, financial planners help safeguard clients’ financial security.

Securing Family Wealth

A financial planner will be able to assist you to structure your finances and plan your estate in a manner that ensures wealth is retained by your intended beneficiaries for the future. Estate planning is essential for preserving and transferring wealth to future generations while minimising tax implications and ensuring beneficiaries are adequately provided for. Financial planners collaborate with clients and legal professionals to create comprehensive estate plans that encompass wills, trusts, powers of attorney, and other essential documents, helping clients achieve their legacy and succession planning goals.

While the fear of handing your money over to another person to manage is perfectly understandable, it’s essential to recognise that professional guidance can significantly enhance your financial well-being and peace of mind. By overcoming misconceptions, conducting due diligence, and selecting a reputable financial planner, you can gain access to invaluable expertise, personalised advice, and strategic planning solutions to navigate their financial journey with confidence and clarity.