At a recent meeting with some fellow business owners, we had a brainstorming session to identify common misconceptions that stop people seeing a financial planner. I’m talking about people who already know that they have financial challenges and that they need to see a financial planner.
What’s stopping them from picking up the phone to make a booking?
There were 11 common myths and misconceptions which I’d like to bust today.
1. Financial planners probably can’t help me.
It was clear that many people were not fully aware of what financial planners can do for them. So, who are these mythical creatures called financial planners and what do we do?
Let me explain.
I offer local, personal, tailored financial advice to families. I am based in the City of Rockingham and my “catchment area” is from Mandurah to the Swan River and from Fremantle to Armadale. I enjoy working with families who want to get their financial ducks in a row.
The advice I provide is broadly based around:
- life insurance (death, total and permanent disablement, trauma and income protection insurance)
- superannuation and retirement planning
- estate planning
- family cash flow and budgeting
I also help my clients with:
- Managing life insurance claims: in the event of a claim, I’m the second person that you ring so I can help you with the claim.
- Evaluating life insurance packages: I help you understand whether you’re getting the best value for money and are paying competitive premiums on existing cover.
- Superannuation planning: I help my clients with investment strategies, how to contribute effectively, salary sacrifice and with age specific strategies such as transition to retirement.
- Estate planning: While I’m unable to write your will, my work does have an impact on your estate plan. Therefore, my services include death benefit nomination for super and beneficiary nominations for life insurance. I also look at more specialised areas such as estate equalisation, helping you leave a legacy and trusts.
We can either do holistic advice where we look at everything in one hit or we can break it down into more manageable “bit size” chunks. Whichever approach suits you best.
If you think you need help in these areas, then let’s have a conversation to discuss your specific needs. And I’ll also recommend anyone I know who can assist you with the rest.
2. Financial planners cost an arm and a leg
The elephant in the room – “How much is it going to cost me, and do you get paid a commission?”
Like many other financial planners in Perth, I work on a fee-for-service basis and my fees are quoted up front in your Letter of Engagement. The extent of the fee depends on the complexity of the advice requested and the clarity of your specific situation.
In regards to commissions, I run a transparent business and I fully disclose any fees in your Statement of Advice. The only commissions that I receive are around life insurance policies as follows:
I’m first paid an upfront commission by the insurance company when the new policy is completed. This upfront commission pays for my time to put your policy in place. I spend an average of 10 hours per policy over a 3 to 4 week period. However, this can be as short as a week or as long as 12 months.
The upfront commission is currently around 110% of the first year’s premium. However, Government legislation is being introduced which will reduce this down to 80% and then 60% in the next 3 or 4 years. The timing of this is still open to regulation.
I also receive an ongoing commission for as long as your policy is in force.
3. Financial planners give biased advice
A common misconception is that because someone is paying the financial planner a commission, then the advice would be biased, and the products would be pushed into a certain direction. That is, in favour of the brands that pay the financial planner the highest fees and commissions.
As described above, the only payments that I receive are the fees and the commissions which are fully disclosed in writing in advance.
I do not receive any other payments that would influence the services and products that I offer you. I decided early on that my financial planning business policy would be to avoid any situations where a “soft dollar benefit” may apply. This means that I provide advice which is solely in your best interest and which avoids any conflicts of interest.
4. Financial planners don’t deal with unique or complex situations
Several clients assumed that their situations were unique, therefore a financial planner would not understand their needs. They could be right… but only if they’re choosing an inexperienced financial planner!
I’ve been a financial planner for over 14 years now, so I’ve had experience of most situations. I’ve seen it all, and I’ve successfully tackled some of the most challenging financial situations you could ever encounter. All my clients are unique, and I treat them as such and with sensitivity and respect.
5. You can’t trust financial planners
Several people told me they’re wary of being burnt from experience and investment losses. Put simply, they’ve tried working with a financial planner but it didn’t work out or they lost a lot of money due to poorly researched advice.
As financial planners, we cannot guarantee any investment. However, what great financial planners can do is have an open and honest conversation with you about what your tolerance to risk is, what assets you like and dislike, and what you feel comfortable investing your money into. My aim is for you to fully understand any investment risks before you go ahead.
6. I can do it myself; Google is my friend
Yes, perhaps with internet you could do a lot of the planning yourself, but here’s the scary part: You’ll be playing a lot of hit-and-miss. You’ll be too busy to complete important tasks such as consolidating your super. And remember, there are so many products available, making the selection process quite a time-consuming exercise.
Another thing is the longer you wait to set your retirement plan, the more complex it will get.
So, if you make any mistakes, you could be pouring a lot of money through the wrong life insurance or retirement package. It’s best to have all the answers up front.
7. Financial planners are out to confuse and intimidate people
“I find it is very personal and intimidating to give answers to direct questions”
I understand where they’re coming from. Yes, as a financial planner, I’m very inquisitive. I ask many questions. I need to so that I can get a complete and genuine understanding of your situation.
If I don’t ask the questions, I would miss some key details that would guide my advice. Without the full information, there’s a high risk that the advice that I give will be inappropriate.
Maintaining your privacy is paramount and I put a lot of time and effort into complying with the Privacy Act 1988. This includes from putting your client file away each night to having a special confidential and secure destruction bin for disposing your private information.
8. Only old or wealthy people see a financial planner
That’s false. So, who can see a financial planner and at what point in their life?
It doesn’t matter how old you are, how much money you earn or how much debt you have.
Anyone aged 25 and above and who has full control over their assets (including insurances) can see a financial planner to discuss the best solutions for their situations.
Most people who see a financial planner are interested in:
- reducing debt
- building wealth
- protecting what you have
- planning for the future
If what you want to do falls under any of these categories, then you qualify to see me.
9. The financial planner is going to sell me something
When working with a financial planner, there’s no obligation to buy. The old days of financial planners flogging products are long gone.
The modern way is for us to make it about you and what you want to achieve. With me, every new client and every regular review is a conversation. I want to know about your dreams. What would you want to have to achieved in 3 or 5 years? What do you want to be able to look back on and say “Yes I did it”? If I can help you to achieve it, then that’s great. If I can’t help you then that is OK, too.
10. Financial planners will treat me like a number
During the brainstorming session with my colleagues, we discovered that many prospects felt that because financial planners get paid commissions, they won’t go “above and beyond” to help them.
I can’t guarantee that all financial planners will go above and beyond for their clients, but at Chaston Financial Solutions, I take great pleasure in trying to surprise you by under-promising and over-delivering. To me, it’s the attention to detail that matters. Not letting anything fall through the cracks. I don’t say that we get it 100% right all the time. Our aim is to achieve 100% customer satisfaction. We’re looking for relationships for life and we know that to achieve that we have to go the extra mile for you.
11. Great financial planners are hard to find
That’s true. Which is why when you’re considering a financial planner, I highly recommend that you ask them for client testimonials so that you can check out what people are saying about them. Do your homework, and book some time with them so you can ask them questions until you’re happy with the answers.
Do you have a burning question for me?
While money can be a complex and intimidating subject, it’s important to address any concerns before they become an issue. If you have any questions about how a financial planner can assist you, feel free to contact me today.
About Mark Chaston
Mark Chaston: PLANNER. STRATEGIST. DAD. QUILTER. PET LOVER.
I’m a renowned visionary, strategist and advisor with many years’ experience leading my clients towards happier and wealthier dreams. My job is to guide you through the complexity, to fully assess and explain your options. Most importantly, to deliver a result.
Since 2002, my work as a financial planner has impacted hundreds of clients across Western Australia, and my ever growing list of long-term clients comprises retirees, young mums and dads, and successful business owners and entrepreneurs.
I have been described as “a Financial Planner with heart” who loves to help people “get all their financial ducks in a row” with advice that suits them and their unique situations.
When I’m not helping clients achieve their dreams, I’m busy being a husband, dad and a protective cat and dog lover. I live in Baldivis where I enjoy reading, cooking, gardening and quilting.
Disclaimer: Information current as at 28 September 2016 – Mark Chaston is an Authorised Representative (No. 263236) and Chaston Financial Solutions Pty Ltd ABN 18 091 037 366 is a Corporate Authorised Representative (No 1244249) of ClearView Financial Advice Pty Limited ABN 89 133 593 012 AFS Licence No. 331367 GPO Box 4232, Sydney NSW 2001. This information is of a general nature only and has been prepared without taking into account your particular financial needs, circumstances and objectives. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. You should obtain professional advice before acting on the information contained in this publication.