Looking for a financial advisor, but don't know where to start or how much you should pay? 
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Managing your finances can feel overwhelming. The last thing you need when you decide to seek help is for that process to feel just as difficult. Our goal is to give you the knowledge and tools you need to feel confident in finding your financial advisor and knowing how much to budget. 

It's also our goal to make sure that people are educated about what they can expect financial advice to look like and the costs for engaging as well as not engaging in good quality advice. 

There are many investment research houses gathering data on this at the moment. Some data from the investment trends reported in 2019 indicated that people were willing to pay on average between $340 and $530 for financial advice. The same report indicated that, for an average scenario, it costs $2900 for an advisory firm to break even on providing advice. Obviously there is a big gap in expectations and commercial reality. 

The one thing that is absolutely true is that there should be a fair value exchange. So what does that look like and what can people expect to pay and, perhaps more importantly, what is the cost of not receiving advice or receiving poor advice? 
What Are The Different Types Of Financial Advice?

When you are looking for financial advice, it will make the process far simpler if you know what kind of advice you need. Believe it or not, there are different types of advice out there.  We'll talk about the most common types here:

  • General advice: This type of advice is more for educational purposes and should not be taken as personal advice. If you seek out general advice, the advisor will not take your specific circumstances or needs in to consideration. Use this type of advice to simply learn more about facts such as how much can you put in to your super each year. In short, this is about facts, but not applying the facts specifically to your position.  
  • Tax advice: Only specifically qualified advisors can offer advice regarding the tax impact of various financial products and strategies. You should ask an advisor if they are a Tax (Financial) Advisor, registered with the Tax Practitioner's Board. If you intend to implement advice, be sure you are working with a professional who is able to explain any tax implications that may arise and assist you in effectively managing your tax position. This can be a major factor in generating more wealth. As Kerry Packer says, minimising tax is essential to wealth creation. I may have paraphrased this slightly, but I am sure most of you know what was really said.
  • Insurance focused advice: This type of advice is exactly how it sounds- advice specific to personal insurance. If you are looking to protect you, your family, your business, etc., then you will need an advisor that is qualified to navigate the world of insurance. This is also very closely linked to Estate Planning. If you are considering making changes to your current policy, understand that you need to start with protecting your most valuable asset: you. Before working with an advisor, confirm that they are across personal protection and estate planning.
  • Investment focused advice: This is where advisors will give you specific advice around super or non-super investment portfolios, perhaps even including direct share advice. An investment focused advisor will develop custom portfolios to suit your investment needs.
  • Scenario based advice: This is when a client seeks out a professional to deal with a specific event in the future. That might be funding your child's education, planning for a terminal illness, or maybe it's planning for a family. Depending on the scenario will greatly effect the type of advice you're looking for and seeking a specialist across these areas may be a wise decision.
  • Holistic advice: This type of advice is best suited for those looking for a personalised financial planning experience. This is when the advisor meets with you personally and gathers as much information as they can about your entire financial world and then builds a strategy for you that takes into consideration all parts of your financial foundation. It can be complex how it all interacts. A good advisor will understand your goals and objectives and take this into consideration in constructing your comprehensive financial advice. Once the strategy has been designed, they will do the leg work to implement these recommendations for you. If you work with a holistic advisor, you will usually build a close relationship together over the time it takes to get to know your financial standing and goals and build out your blueprint to financial confidence.  

So the question becomes, are you wanting to fill a specialist gap that you have or are you wanting someone to manage your whole position across all different areas of your financial life? Depending on the type of advice that you need will largely determine the type of advisor you are looking for and in turn, the amount you will pay for that advisor.

The "One"
How will you know when you have found the right advisor? This will largely depend on what it is you want from the person you work with, but we have identified 3 key attributes that certainly set some advisors apart from the rest.  
The right advisor makes finance simple for you
You're likely not seeking out an advisor if you already have a deep understanding of finance jargon and methods. If you meet with an advisor for the first time and they speak to you as if you are as much an expert as they are in their field, they may not be the right fit for you. The right advisor is also a teacher and it comes naturally to them to break down information in a way that makes it simple for you to understand. 
The right advisor keeps you in the loop
You may be the type of person looking for a holistic approach to advice where you can be as hands off as possible. That is completely fine, but this doesn't mean you should be uninformed. The right advisor exhausts their resources to keep you in the loop. Look for an advisor who provides annual reviews, quarterly updates, monthly newsletters, and perhaps a social media presence where they can provide urgent information quickly. There's also a fine line here because the right advisor will not bombard you with useless rhetoric, but rather, provide impactful insights and touch points that make your world easier to navigate. 
The right advisor cares about you and your business
Many people treat advice as a transaction, but the reality is that advice is generally a relationship. A true professional will take the time to understand where you are currently and where you aspire to be before they offer any advice. The right advisor will earn your trust by getting to know you and asking you incredible questions until you feel confident working with them through their ability to understand your desired future and explain a path to get there. 
Financial Advisor Price Ranges
The different price ranges of financial advisors are better understood by knowing the different types of clients there are. We have found that there are really three types of clients. Depending on what services you require and what type of client you are will largely determine the amount you will pay for an advisor. 

DIY Clients

$0 - $3,000

"Do It Yourself" Clients are clients who feel quite confident in managing their finances and are simply looking for a learning opportunity to better prepare them. The DIY Client may also be a client who is interested in seeking help from a professional, but is not entirely ready to commit to a working relationship with an advisor.

DIY Clients looking for free or very low cost help should engage with social media pages of the advisors who are sharing tips and insights regularly. DIY Clients who are interested in making a small investment in to their financial knowledge should look for the advisors who have online, educational programs and other short course type initiatives to condense the fundamentals and possibly even tech software to make navigating a DIY world easier.

This is an avenue that many clients pursue before they are ready to take on an ongoing advice relationship. Some advisor firms will even run short discovery calls to give these clients a head start on the journey.

The DWY Clients are clients who would like professional help to kickstart their financial journey, but intend to manage their financial world on their own once they have the strategy, tools and resources they need.

This type of client is becoming more common as information becomes more and more available and software is becoming more user focused and user friendly. We believe that this will be a space where many Australians operate in the future. 

However, there is a catch. Law industries and economics are changing so rapidly these days that should you choose to be on the DWY journey, you will need to keep up to date with the most recent changes and market movements. Setting your strategy up front with an advisor and then finding a platform to stay informed is key to the success of managing your affairs in the future. 

Typically we do not see many advisory groups operating in this transactional space, though we believe this will change in the future, given that there can be a substantial amount of research and strategy needed to cover a full financial foundation. The cost of this advice may be significantly higher than that of an ongoing relationship. Either way, you need your advisor to understand where you're heading so they can map out your current and future needs and contingencies for them so you can follow the map and ideally stay up to date with the changes in legislation and markets overtime. 

The DWY client should look for an advisor with educational programs and the option to work together to build the strategy or financial map. This may also be a hybrid with the DIY client where you set the strategy up front and you stay informed via an online programme.

DWY (Done With You) Clients
$3,500 - $5,000
DFY (Done For You) Clients
$5,000 & Up

The "Done For You" Clients are clients who want someone else to completely manage their financial journey for them. This may be a client who is not confident in their ability to achieve their financial goals on their own or possibly a client who is confident, but would prefer to not dedicate the time necessary to run their finances. This client should seek out a long-term relationship with an advisor that is renewable on an annual basis.

The value of this advice will largely be determined by the scope of work. For business owners, this can be substantially higher if the advisor gets involved in assisting with the business financials and relating them back to the individual personal circumstances. 

For salaried employees, this will be largely determined by the scope of work and the amount of ongoing work you would like the advisory firm to participate in. 

Many advisory firms now have fixed fee packages for clients that are mapped out based on the cost of delivering the advice. Typically, this is based on an up front fee for the research, strategy and implementation and an ongoing retainer with different service levels based on your different service requirements. 

How To Find An Advisor

There are many ways to begin your search for an advisor. Here are the top three ways people start their search. 

Google
Social Media
Referrals
Google is an incredible tool and it's a great starting point when you don't actually know where to start. The magic of Google is that it only needs a few simple keywords to bring up thousands of results directly related to your search. The downside is the potential for information overload. Consider Google your jumping off point when you begin researching information about financial planners, but perhaps look at the other two search tools as your way of finding your advisor. 
Social media is an excellent place to search for your financial planner. While not all financial advisors are on multiple social media platforms, most are at least on Facebook. Looking for advisors on Facebook is easy- you can simply search "financial advisor" and adjust filters for your preference in results, including location. Once you find a company's page, have a look at what they share, the interactions between them and their followers, and reviews that people have left. If you get a good feeling, reach out! 
Quite often, really great advisors are by referral only. If you locate an advisor and find that they are by referral only, it's usually a good sign. This means that they have other professionals and clients who are actively and willingly referring friends, clients, family and colleagues which speaks volumes to their ability to build relationships and do their job well. It's a good idea to find out who the advisor works with, seek their review of the advisor and ultimately request a referral if they sound like the right fit for you. 
Red Flags
Just as it is important to know what to look for in an advisor, it's critical that you also know what to look out for in an advisor. Here's the top three red flags to look out for when you engage with an advisor.
Transactional Advisors
Some people view financial advice as a transaction- meaning, their intention is to make the most profit off of the least amount of work possible on their part. If you find an advisor who is continually promoting products without any efforts to engage in an ongoing relationship with you or provide additional ongoing value to their services over time, this may be a red flag. 

An advisor who isn't asking probing questions 

The right advisor will want to build a relationship with you and learn as much as they can about your financial standing and your goals. If you are working with an advisor and the conversation constantly feels one-sided, led by you, this might be a red flag.
An advisor who just wants to sell you products
Advisors do make commission off of the products that you purchase, but a truly professional advisor does more than just sell products. If you begin working with an advisor and it feels as though their strategy for every financial goal you have is the purchase of a product, this likely isn't the best advisor for you. 
The Cost of Bad or No Advice

The cost of having poor or wrong advice can be life changing.

Having operated for over 20 years in the world of financial advice, what we have seen is the sometimes tragic ramifications of poor or no advice. 

We have had many clients come to us over the years who have not sought advice until one of their loved ones had passed away. In a number of these cases, there was very little we could do and families proceeded to implode due to incomplete or no estate planning. We have seen clients who attempted to get their death benefit payouts of their loved ones have to fight for them- sometimes for multiple years- before their insurer or the superfund would pay them out.

We have seen far too many people seek advice on how to manage on very limited resources due to the lack of preparation of a personal protection plan. Good advisors will challenge clients around what they need and what they want and find a happy balance so that clients are protected even in the worst of times. We have seen guys that have not had enough personal protection leave their families destitute and struggling. We have also seen clients who have forgotten about their insurance over time and ended up paying a small fortune for policies that they could have paid cents on the dollar for had they been structured correctly.  

As you can see, there is a lot to consider when choosing a financial advisor or deciding how much to spend on one. However, hopefully the biggest take away from this is that there are many factors that determine the cost of a professional advisor and sometimes, the price of poor advice or no advice at all can be the most costly.

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