Benefits of financial advice
Enlisting the help of a financial adviser will help you achieve greater control over your life, maintain a comfortable lifestyle, live well in retirement, provide financial support to your family and take the stress out of planning to live your life – so you can just get down to the "living" part!
Whilst most people are aiming for financial independence, only a small minority of Australians will achieve this goal. Professional and unbiased financial advice can improve your financial position and support the lifestyle of yourself and your family by providing:
- Specialised Skills & Knowledge – The finance industry is complicated and fast changing with complex laws and an increasing number of wealth creation and investment options. Highly trained and skilled finance professionals can help you navigate and uncover opportunities to improve your position.
- Personalised Strategies – An objective and unbiased financial adviser will develop a long term, customised strategy and plan that is in your best interests and suitable for your situation, goals and objectives.
- Time Saving – Some people have great financial knowledge and skills, but are time poor because of their work, family and other commitments. A financial specialist can quickly tailor and implement strategies to begin improving your financial position straight away.
- Discovery and Documentation of Goals – A financial adviser will help you discover, document and update your financial goals and objectives. Written goals act as a constant reminder to both yourself and your adviser as to what needs to be accomplished. Written goals tend to be accomplished whilst non-written goals remain a dream.
- Discipline of Doing – A financial adviser will translate a financial plan into manageable pieces and then make sure that all of the pieces are implemented and come to life.
- Decision Support – Whilst it is easy to uncover ideas and options, it is often more challenging to make objective and fact based decisions. Many financial decisions are difficult as they require analysis, information and most importantly, compromise. It is common for people to research numerous financial options but decide nothing as they become overwhelmed.
- Compounding Gains – Some of even the smallest financial gains achieved through positive advice (or avoidance of mistakes) can compound and generate significant wealth over a longer period of time. To illustrate by example*, $100,000 invested over 30 years earning 7% per annum returns $761,225 whilst the same investment earning an additional 2% per annum (9% per annum) returns $1,326,768 at the end of the term.
- Unrecognised Needs – It is often the case that people discover they need professional advice after it is too late. The earlier you begin, the greater the benefits. A common example of an unrecognised need is personal risk insurance - Australians as a group are massively under-insured in relation to the risk of death, illness or injury.
- Coaching & Education – A good financial adviser is also a financial coach and educator. They should be available to answer questions, help review ideas that you present, build your knowledge, and increase your financial skills and confidence.
- Removal of Emotions – Emotional and impulsive financial decisions can frequently be the wrong decisions. Objective and unbiased advice will help make fact based recommendations.
Warren Buffett once said “to invest successfully, what’s needed is a sound intellectual framework for making investment decisions and the ability to prevent your emotions from corroding that framework”.
Examples of where psychology and finance can mix are:
- Irrational optimism – Believing good things happen to me (because of skills, knowledge and luck) and bad things happen to others.
- Over-escalation of commitment – Sticking to poor decisions or poor investments for too long.
- Staying familiar – Sticking to investments that are well known to you rather than learning more, diversifying and looking at broader options that may prove to be more successful.
- Denying mistakes – Not facing up to the facts of today and remaining in denial about previous mistakes.
- Copy cat – Copying the financial decisions of others, irrespective of whether it is right or wrong for your situation.
- Ignoring chance – Attributing an inappropriate amount of short-term results to luck or random occurrences.
- External influence – Listening and acting upon the speculation and comments of someone else (such as the media), rather than personally researching the facts and using your own judgement.
- Denial of Risk – Believing that significantly high returns can be achieved without taking any additional risk.
If you would like to discuss how F3 Financial Services can support your future success and financial independence please contact us at any time to request a free no-obligation initial meeting.
*Simulated investment returns have been prepared for illustrative purposes only. Simulated investment returns and past performance are not a reliable indicator or guarantee of future performance.