1. You are happy with the status quo and don’t have any money worries
A financial planner will dig into your financial life. They will want to know what drives the decisions you make and what keeps you up at night. If you have a partner, they will want to know this from both of you. Without this conversation, a true financial planner doesn’t feel they can do their job effectively, so they will ask difficult questions and try to understand what it is that you want to achieve.
It might sound a little strange to those who haven’t experienced financial planning, but how can they build your financial plan without understanding you as the client.
You should not hire a financial planner if you have no money worries and you are happy with your finances, you won’t get any value from it.
2. You know where you stand financially, where you are going and know what money you need to get there
This is the interesting part. Financial planning is a process of collaboration between the client and the planner. A good financial planner will want to know what your finances look like today and they will want to know what you want to achieve over time.
Once they have a clear understanding of this, they will start the work behind the scenes to build you a financial roadmap of how to get there, and approximately how much you need to make it happen. It isn’t an exact science, but they will use a few assumptions in a forecasting model.
They will look at things like investments, property and other solutions as tools to help you get to your destination in the most effective way.
If you have this covered or you just want to live day by day leaving the future to chance, then a financial planner isn’t for you.
Don’t hire one, they will just give you simple solutions to your problems.
3. You feel confident making decisions for you and your family and you don’t need to be challenged
Once they have built your roadmap, a financial planner will continually challenge any future financial decisions and keep you accountable to the plan. Like a good personal trainer or business coach, they will keep you on track and as your life changes and evolves they will adapt your financial plan. This is what they call the ongoing service part.
Some financial planners will meet you every year, some will meet more regularly as an agreed service, but they will use these meetings to show where you are on your financial roadmap, and they will lift the burden from you around managing your family finances. They will usually be available for when you want a sense check on big decisions, or just general money queries.
If you are confident in making these decisions and you don’t need an ongoing service like this, why on earth would you pay for one. What a waste of money.
4. You understand the world of finance and you have the time to look after your money
Good financial planners break down the complex world of finance and explain it to you in a simple and relevant way. They will speak in your language, explain what can be complex in a way that you understand and work with you and your family as a team.
They will tirelessly search the investment world for solutions that help you meet your objectives. A good financial planner can find better deals and solutions than your average consumer.
You can have peace of mind because in Singapore the regulator is constantly improving transparency and fair dealing standards across the financial advisory industry, to make sure that clients get quality advice and good outcomes.
Looking after other people’s money is a busy job and behind the scenes, there is a lot to running a good financial planning company.
To be honest, you may be able to ask some random guy on a money forum a question about finances or read an article on a website that gives you some of the answers. If you have time to trawl through the free information world in the hope that you stumble on the golden nugget that helps you achieve your financial goals, and can recognise it when you see it, you don’t need a financial planner.
5. You already have a financial adviser or investment manager who advises you on products and investments and you are completely happy with the returns
A financial planner leads with the planning and not the solutions. The first step is always developing a plan which can achieve your goals, and only then considering the tools to be used to deliver the results. A decent financial planner would take tax into consideration in all advice given and they would target returns needed to achieve your financial objectives, but this is very much the second stage of planning.
Financial Planners understand that the world of investment and products is becoming more commoditised and they are looking to have long term partnerships with good clients who understand they need help with managing their finances, want a financial plan and listen to advice. Good financial planners don’t want to just sell clever products or solutions to their clients, as they believe this undermines the partnership.
You know exactly what costs you are paying (good luck with that one) your existing financial adviser or investment manager, what service is to be delivered and you feel value from the relationship.
If you are happy to solely talk about investment returns and clever solutions and ways to save tax, then hiring a financial planner is not for you.
If you are still reading and you are interested in meeting a financial planner, we would be happy to help at AAM.
Our belief is that the old world of traditional product focused advice is dying a slow death and good riddance. We prefer to look at your full situation, ask you what you want to achieve and build a financial plan around you and your goals.
If you would like an informal discussion to see how we work, contact us today for a free financial planning consultation.
Op.ed piece by Ian Black, Director of Global Wealth Structuring, AAM Advisory
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