Financial planning is a poorly understood concept that for many people is complex, too expensive and overshadowed by adviser mistrust. Many avoid financial advisers because they believe that they will be sold a commission based financial product that they don’t really want, without being any better off financially.
So many people turn to family and friends for advice. Often, they rely on flawed advice, and adopt a simplistic and less-than-ideal approach to household money handling. The real problem here is that most Australians live from week to week. It feels ok when things are going well (i.e. “What’s all the fuss about – she’ll be right mate!”), but there are some inherent traps in this approach:
- Although there are several basic, universal principles of personal financial planning, everyone has different circumstances; different goals in life; and a different attitude to investment risk. So what works for one may not be right for another at that time, or indeed ever. To get your planning right, there’s an order of doing things and none of those things should keep you awake at night.
- For many, their potential wealth is being leaked to banks through credit cards. Ease of access to credit has led to instant consumerism and a shift away from a savings discipline. The majority of Australians waste the opportunity to grow their wealth by spending everything they earn or, in some cases, by spending more than they earn.
- Most people are not prepared for the things that can go wrong, such as retrenchment, accident, or sickness. One or more of these is bound to happen over the course of an 80-year life. Without income, most can’t last more than a month without racking up debt.
- A whopping 80% of Aussies don’t adequately provide for the future, including retirement. A lot of financial problems arise with an unexpected death in the family. For example, two thirds of Aussies don’t have a valid Will, which means an eventual wrestle with State government intestacy laws, which assign money and property according to an unfriendly fixed formula.
The issue for most people is not that they don’t care. It is that they don’t know. People are simply unaware of what they don’t know and they don’t know who to trust to find out. That is why it is essential to get information from someone trustworthy who does know.
Most financial planners out there are scrupulously honest and highly trustworthy. I am one of them, and after almost 20 years in the industry, I have a large store of valuable knowledge, which I now share at low cost.
I have retired from public practice and started the innovative and unique MyProsperityForum.
It is a low cost way to access a highly knowledgeable financial planner and receive information, ideas, general strategies and guidance. In the end, it is your choice whether you do it yourself or ask to be referred to an appropriate professional. A critical element of the forum is that the general advice given is not tainted or biased by selling plans or financial products. It is a safe place so give it a try.