Use of financial planners

[ChilliBlue]

Should I use a Financial Planner?

My husband and I have paid off the house and have a spare $4K a month to invest.

Being in our early 30's we thought it might be best to start looking at getting advise from a Financial Planner to better minimise taxes paid and get a better idea where we should invest.

What does everything think about uses a FP services and what should be be looking out for?

 

[jono1887]

Re: Should I use a Financial Planner?

My husband and I have paid off the house and have a spare $4K a month to invest.

Being in our early 30's we thought it might be best to start looking at getting advise from a Financial Planner to better minimise taxes paid and get a better idea where we should invest.

What does everything think about uses a FP services and what should be be looking out for?

You'd probably get better advice from this forum than from paying several thousand to see a financial adviser :
Although we're not meant to give out financial advice on these forums...
IMO i would minimize taxes through neg gearing of a property and use the other half rest on the stock market, maybe with a margin loan geared at 40-50%

 

[Julia]

If you have read through this thread from the beginning you will have a fair idea about what most of us think about financial planners.

Might also be a good idea to read the Storm Financial thread to understand what can and has happened.

 

[Jack Payback]

Re: Should I use a Financial Planner?

What does everything think about uses a FP services and what should be be looking out for?

If you want to see an FP, try and avoid ones that are aligned to an institution, such as a bank or AMP etc, as they will steer you towards their products, i.e there is a conflict of interest.

Look for independence and fee for service payments, not a commission based adviser, as they will sell you a product that gives them the highest commission which may not be the best investment for you.

Go and see at least three of them and go with who you are most comfortable with. You don't buy the first car you see when you are shopping for a vehicle, don't put your financial future in the hands of anybody.

If you see a stockbroker, they don't earn product commission, but the danger is they churn (buy and sell) your portfolio frequently as they can charge you for advice per transaction.

There are good advisers out there, but you have to search for them. Ask your friends and family if they use anyone, and see if they are happy with the service, would they recommend them?

 

[Kez180]

Re: Should I use a Financial Planner?

Ask your friends and family if they use anyone, and see if they are happy with the service, would they recommend them?

Going back to the storm example... I think a lot of their business was through referrals... do your own research, ask too many questions... if you are going to pay someone thousands... make sure they earn it.

Don't do anything that you don't understand... if the adviser doesn't want to explain, go somewhere else...

 

[Sir Osisofliver]

Re: Should I use a Financial Planner?

My husband and I have paid off the house and have a spare $4K a month to invest.

Being in our early 30's we thought it might be best to start looking at getting advice from a Financial Planner to better minimize taxes paid and get a better idea where we should invest.

What does everything think about uses a FP services and what should we be looking out for?

Chilli it seems pretty obvious what most people here on this forum think about planners..we are a bunch of parasites and salespeople who don't have your best interests at heart.

Chilli right now from what you have said you are not particularly attractive as a client for most planners...you want advice on how to minimize your tax and what structures may be useful for you to invest through such as discretionary trusts, corporate trustees, corporate beneficiaries etc etc. But the payoff for most planners doesn't exist. You don't have a large sum of money to invest from which most planners can draw a trailing commission. Any corporate entities or trusts should be cheaply set up by your accountant, they don't charge by the hour like a taxation lawyer, the only way they get their money is if they can convince you to use a product from which they can draw a fee.

The only way to do that will be to gear your House and free up a significant amount of funds. If you are not prepared to do that then most of them will tell you that they cannot "add value" - which is planner speak for "You're not worth my time".

Gearing or not gearing the house may or may not be appropriate for you. I myself would probably suggest that the asset is being underutilized towards your long-term financial security and having no debt (whilst envious to most people) is probably not the best idea if you are on a high income. (NOTE THAT THIS IS IN NO WAY TO BE CONSIDERED PROFESSIONAL ADVICE TO YOU...don't make me quote disclaimers at you). The difference between myself and the sort of planners and financial advisers that most people here refer to is that a) I charge fee's up front not trailing commissions b) I know how to do these things safely so that you don't get Stormified.

If any planner suggests double gearing IE drawing on your PPOR and then using a Margin Lending facility to "double up" (and there is nothing intrinsically wrong with the product of margin lending or concept of double gearing if used safely) examine what risk management and optimization strategy that the planner has put in place. S/he should have in place a reserve that is appropriate to your risk tolerance (and depending upon your risk tolerance this strategy of gearing your PPOR may not be appropriate for you at all), a cash flow analysis that takes into consideration what the effects of following such a strategy will be for you, an exit plan or longer term strategy to gradually achieve a) paying down the PPOR borrowings and/or b) paying down the Margin Lending facility; Hedging or risk minimisation strategies (and an estimate of cost of such "insurance").

You are far,far better off going directly to a reputable planner that will charge an up-front fee and not wasting your time with those that will charge you a commish in my opinion.

P.S. I'm not looking for clients - don't ask.

Cheers
Sir O

 

[Jack Payback]

Re: Should I use a Financial Planner?

"the only way they get their money is if they can convince you to use a product from which they can draw a fee."

I like that.... (and I'm an FP!!!)

Seriously, if you don't feel comfortable with an adviser's recommendation, just don't do it. End of story. Keep your cash in the bank, it's your money not theirs.

If you go with an adviser's advice, make sure you read everything you are given. It's the same as a mortgage contract, everyone with an issue gets caught out cos they never read the fine print.