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  • Colin Lea, BBus (Ag Comm), BA, GDFP, CFP®

T2 Value in the Financial Advice Relationship

Updated: Aug 27

  • 59% of the population aspire to live the lifestyle of their choosing by aiming to achieve full financial freedom and independence.

  • Engaging a Professional Financial Adviser is one of the most daunting financial decisions people make, with 25% of the population never seeking advice when making complex financial decisions.

  • Quantifying the value you are seeking in the financial advice relationship will help you find the right Financial Adviser for you, especially one with a background in working with Business Owners and Farming Families.

  • Trust and Technology (T2) will be the anchor points in a digital age that make the advice relationship successful for you in achieving your lifestyle and financial goals.

Dare to Dream - Lifestyle Goals through Financial Strategy

The concept of financial advice is often misunderstood. Many merely think that Financial Advisers solve money problems. In contrast, financial advice is about so much more. It is about bringing dreams to life. It is about identifying your life goals, hopes and dreams - and putting in place a financial plan to get you there. Which is pretty important when 59% of the population aspire to live the lifestyle of their choosing by aiming to achieve full financial freedom and independence.

To expand on the money concept, many people think that the reason for seeing a Financial Adviser is to get better returns on their investments, whether they be inside or outside of superannuation. Indeed many would be confused by a certain superannuation industry advertising campaign, that suggests fees are the driving principle of investment return, over and above anything else including retail and self-managed super funds.

Professional Financial Advisers - The Value Relationship

Vanguard have shown through research (Brinson, Hood & Beebower [1986, 1991]) on portfolio design that asset class allocation accounts for 94% of long term performance for investors:

So what value then do people place on investments and investment returns as part of their reasoning for seeking out professional financial advice? The Actuaries Institute (“The Value of Advice”, The Institute of Australian Actuaries Forum and Vanguard calculations, using data from Morningstar, Inc. [as at 31 December 2011]) shows that clients engaged in a financial advice relationship with their Professional Financial Adviser only attribute 20% of value to investment advice as part of their overall financial strategy.

So why do people see Professional Financial Advisers?

Engaging a Professional Financial Adviser is one of the most daunting financial decisions people make, and yet 25% of the population never seek professional advice when making complex financial decisions (FPA Australia, Dare to Dream Report, 2016). But as I have discussed above, investment selection and performance is only part of the reasons why people seek out financial advice; 80% of the value is attributable to more broader strategy development, implementation and ongoing monitoring as outlined below:

People have different needs at different stages in life, and the financial advice they require differs equally as much. Young people starting out require advice on cash flow, education and saving goals. Young families may need advice on how they will fund their children's education and paying off the family home. Empty-nesters will want sharp strategies on how they can maximise their time to accumulate wealth prior to retirement. And retirees might need advice on funding their income in retirement (while making it last), and considering future aged care needs.

And then along the way there will be the unknowns that crop up that require financial advice; funding treatment for unexpected ill health, dealing with relationship breakdowns, managing financing pressures for self employed and business owners, or dealing with the tax implications of an unexpected windfall. The more complex the issue, the more important the need for quality financial advice.

Trust and Technology in a Digital Age

Quantifying the value you are seeking in the financial advice relationship will help you find the right Professional Financial Adviser for you. Yes - it is becoming increasingly easier to make financial decisions for yourself; financial service providers are rolling out online platforms enabling you to secure finance for loans, invest your super and buy shares, even down to insuring yourself with personal life insurance cover.

Sometimes the reason for people doing things themselves is it seems easier (can be done quickly), and more importantly they don't know who to trust. However I would argue that these two key factors - Technology and Trust (T2) - can be double edged swords. For example, do you trust yourself to be making the right financial decisions? Have you read the fine print in the investment or insurance product disclosure statement? Do you really know what the financial implications are on the decisions you make yourself?

Having now considered T2 - you can embrace them and make them strategy anchor points for your financial advice relationship in a digital age.

To put that in context - use technology to inform yourself and do research online. Look up accredited Professional Financial Advisers online, find out more about them on their company websites, as well as social media like LinkedIn and Facebook. Look for testimonials from satisfied clients and articles that show the types of values their firm and their staff hold dear. Gain an understanding of and appreciation for the costs associated with getting professional financial advice. Make sure you access your existing superannuation, investments, loans and insurance online to ensure you clearly understand your current financial position as best you can.

Then meet with a number of Professional Financial Advisers and shortlist the ones you feel most comfortable with. Having done your research, you will know when you find the right Professional Financial Adviser for you; the one that you can trust to work with you and guide you to achieving the lifestyle and financial goals that you aspire to. And the time on research is time well spent; next to your spouse, a Professional Financial Adviser is the one person who will know more about you than any other person throughout the course of your life. And when it comes to fees, remember this:

"Price is what you pay, value is what you get."

Now you understand the value - Take Action

A Professional Financial Adviser keeps you on track to achieving your goals. Like having a personal trainer, the accountability and structure can make the difference between a dream, and a dream that becomes reality.

The same parallels can be applied to your finances. A Professional Financial Adviser can also empower you with knowledge, assisting you to confidently make decisions about your future - decisions that will move you along the journey from dreaming, to turning your dreams into a reality. And if you have trust and can embrace technology, then finding the right Professional Financial Adviser for you becomes a great opportunity, as you need not be limited to finding one in your geographical location - you can simply focus on finding the right person for you!

Speaking from previous experience as a client (to the firm I now work for), having the right Professional Financial Adviser for me was invaluable as my family and I negotiated four domestic and one international career related moves over 11 years (including three military deployments overseas for me). It didn't matter where we went, what mattered was that the quality and consistency of the advice relationship remained during this time. This is an important principle that mattered to me, one which I now extend to my own client base with clients being serviced as far afield from Townsville as Port Hedland, Perth, Canberra, Mount Isa, Brisbane, Ayr, Ingham, Tully, Mission Beach and Cairns.

A Parting Shot...

When I engaged a Professional Financial Adviser in mid 2002, it was because I knew in about ten years time I would want to settle the family in Townsville, and change careers after 20 years in the Australian Army. My experience ensured that we were in a strong financial position for me to change careers, and for us to buy a family home in our dream location by the beach. They must have done a good job, because I valued what they helped me achieve so much, that I asked to join the firm and have the opportunity to help others achieve their dreams.

Or more simply, if a picture speaks a thousand words, then I'll let the following photo of sunrise on my morning walk speak for me...

Get in Touch: If you have any questions on the above article, or would like to book an obligation free appointment to discuss your business, financial or investment goals in more detail, please phone (07) 4760 5900 to make an appointment or email me at and I'll touch base with you.

About the Author: Colin Lea has a prior professional background of 21 years in military & international logistics, strategic planning and management, including operational deployments overseas and an international exchange with the US Military. Colin is a Partner and Financial Adviser CFP® Professional with the Carey Group, and holds Financial Planner membership with the Financial Planning Association of Australia.

Disclaimer: This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

#ProfessionalFinancialAdvice #FinancialStrategy #Technology


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