Or should you just DIY?
Trust is a quality that can take years to establish.
And about a minute to lose.
We see this in action at the moment with the recent arrest in the Bahamas of the Cryptocurrency billionaire, Sam Bankman-Fried. And the related dive in the value of most other Cryptocurrencies.
A not dissimilar sentiment can be seen in the views of many retirees toward financial advisers.
Some of us have long memories and so the excruciating detail of financial misbehaviour that was revealed in the 2019 Royal Commission can be very hard to ‘unsee’.
So when we posed the question in the November Retirement Pulse survey, ‘What is the major reason why you would not seek financial advice’ we expected to learn that a lack of trust was a strong factor.
But we were missing something.
Interestingly, there was another factor that ranked far higher, and that barrier was one of cost.
It seems that the main reason some of our members do not wish to seek advice is that they believe it is far too expensive and probably not going to deliver value for money.
Ben, the winner of the free advice consultation put it very succinctly:
‘Major reason? Cost. (I also have a) lack of trust that they are working for me and not receiving kickbacks from product suppliers. Also, there is a risk of them wanting to churn investments for brokerage.’
There’s quite a bit to unpack here, but we trust that Ben will find his free consultation with a Retirement Essentials’ adviser to be a very positive experience. The good news is that we do not promote or sell financial investments so there is no danger of kickbacks or of churning anything to earn more fees.
And clearly a complimentary appointment tackles the cost issue very neatly!
But let’s unpack the concern about cost a little more.
A common response to why someone won’t seek advice is because they believe that they ‘really don’t have enough to worry about’. And in some instances this can be the case. But there is no ‘one-size-fits-all’ costing for financial advice.
Some advice is personal, some is general The Moneysmart website explains the difference very usefully. For a detailed financial plan, the going rate seems to be about $3500. There is a reason for this. Financial advisers are now required to observe much more extensive compliance requirements and it does take a lot of time to meet with clients, understand their overall financial situation, goals and other related matters and then to create a long term plan that will tick the required client and compliance boxes. This is not written as an ‘excuse’, rather an explanation of what financial advisers are required by law to do. So it is little wonder the number of advisers in Australia has shrunk from a peak of about 30,000 in 2016 to about 16,000 today.
Retirement Essentials does not offer this extensive personal advice solution. Instead, we offer one-off $330 consultations which allow our members to discuss specific issues and to more fully understand the rules that will apply to their financial decisions. You may have read the ways our advice and customer service team have helped members this past year – saving many of them thousands of dollars for a modest fee of $330.
As one member said in response to the same Retirement Pulse survey question:
‘This question does not apply to me as I am a full member of Retirement Essentials and receive financial advice and support when required.’