Money is one of the most important resources you will ever manage. How you manage it will significantly impact your lifestyle, both now and in the future. So deciding on who gets to help you make decisions about money will be an important consideration.
In Australia, you have two options: seeing a financial advisor or managing your money yourself. Making the right call between a financial advisor or a do-it-yourself approach depends on several factors, not the least of which includes your time, money habits, financial knowledge, portfolio and your goals for the future.
Let’s walk through the decision-making process so that you can apply this to your personal circumstances.
What does a financial advisor do?
A financial advisor is a professional who helps others make smart decisions with their money. This applies to individuals, couples, families, or business owners looking to meet long-term financial goals.
The services provided by a financial advisor depend on your individual needs and often include:
- Financial advice
- Financial goal setting
- Financial decision-making
- Asset protection
Each of these is blended together to create winning outcomes for clients, their families, and their future goals.
Should I use a financial advisor or do it myself?
Is it worth paying for a financial advisor in Australia? If any of the below situations apply to you, the answer is almost always yes. Financial advisors are an excellent investment for individuals looking for expert advice or who want to get an edge on their finances.
You may want to use a financial advisor if:
- You are a young professional — Time is your biggest asset due to the power of compounding returns. The earlier you start getting your money working for you by investing, the more you’ll be able to achieve. Expert financial advice will help you maximise your savings and invest for a great future, as well as kick goals such as buying your first home.
- Your financial knowledge is limited — If you don’t have extensive financial knowledge, a financial advisor can help you make sound financial decisions. Even if you’re financially astute, a financial advisor can still add a lot of value which we discuss further below.
- You don’t have the time — You may not have enough time to keep your finances under control. A financial advisor can make it simple and easy, helping you to invest efficiently and effectively.
- You have complicated finances — If you have multiple investments or financial activities, a financial advisor could help you navigate them more effectively, saving you time and optimising your returns.
- You feel lost with money decisions — Perhaps you don’t know where to start to make the most of your money. Or maybe you have earned a decent amount but have little to show for it and want to make better decisions in the future. If either of these situations apply to you, seeing a financial advisor is a great place to start.
- You want better cash flow — Even if you earn a high income, you may feel as though you can’t get ahead. A financial advisor can take control of your money and manage it with ease so you can reach your goals faster.
- You want help with setting goals — Want to give your children a private education, upgrade your home, or retire by 40? A financial advisor can help you create a defined path toward your goals.
- You want to overcome financial disagreements — Money fights are one of the most common pain points in any relationship. Turn to a financial advisor to get aligned, set shared goals and receive an objective perspective on your money issues.
- You’ve received a windfall — If you’ve received a large inheritance, made good capital gains on an investment or have been lucky enough to win the lotto, a financial advisor can help you benefit from your windfall over the long-term.
- You are approaching retirement — As you start thinking about winding back work, a financial advisor can equip you with expert knowledge to help you make informed decisions for your nest egg. This includes transition to retirement strategies to minimise tax.
- You want peace of mind — A financial advisor can help you make the best possible decisions for your family, as well as protect their future through investment, insurance and estate planning. That way, you can rest assured you’re doing all you can.
Myths of DIY money management
Many people believe that DIY money management is required under certain circumstances. However, this is simply not true. There are benefits to working with a financial advisor at any age, income, or portfolio size.
There are several big myths to dispel here:
- You can DIY money management if you have a high level of financial knowledge —Financial advisors only enhance rather than detract from your money knowledge and investing skills. For example, they can advise regarding the broader impacts of your monetary decisions, such as tax implications. They can also help provide an objective perspective to decision-making, or get you a better deal on financial products.
- You can DIY money management if you do not have an extensive portfolio — Financial advisors can help you with practical strategies regarding better day-to-day saving, buying a home, or starting a family. If you earn a decent income but have little to show for it at the end of each month, a financial advisor can help you establish good money habits, set future goals, and keep you accountable.
- You can DIY money management if you do not want financial planning services — Professional advice allows you to make more informed decisions about your money at just a fraction of the cost of a financial mistake.
Regardless of your financial standing, Growth Financial Planners have the expertise and insight to support your future with wealth-building practices. Book your strategy session today to unlock the potential of your most valuable resource. We look forward to serving you soon.
FAQs
Is hiring a financial advisor worth it?
Almost everyone can benefit from a financial advisor. If you are interested in making smarter decisions about your money, an advisor can help you manage your money more effectively and build a better future.
What are some risks associated with managing money myself?
There are a few risks associated with managing your finances on your own, the most common being:
- Making suboptimal decisions
- Misallocating investments
- Paying too high fees
- Failing to plan for the future
- Failing to take action
- Lack of accountability
By using professional services from a financial advisor, these potential risks can be navigated with careful planning instead.
Why should I use Growth Financial Planners as my financial advisor?
As a privately owned, WA-based financial advice firm, Growth Financial Planners believes in planning every part of your life, not just your investments. We help clients envision a future they’ll love and create a winning plan that puts their money to work.