Get the best pro advice on your retirement finances in three simple steps

But making financial preparations for retirement isn’t something you do often in everyday life and given that everyone’s circumstances are different, taking tips from family members and friends alone may not deliver the answers you need or deliver the best outcome.

That’s why seeking financial advice can come in handy, by looking at your personal situation and offering solutions that may not occur to someone without many years’ experience in dealing with complex financial situations and products.

But if you want to get the best out of professional financial advice, it’s key to go into the relationship with the right expectations. Tim Howard, a technical consultant at BT Financial Group (BTFG) says that using a financial adviser usually involves three stages, which may run over just a few meetings if you’re seeking advice on a single issue or may stretch out over years if you plan to use the adviser regularly to review your broader financial plans.

The initial meeting

As with any successful relationship, you and your financial adviser need to see eye-to-eye, which is what this meeting is all about.

“At the first meeting, there’s no pressing need to go in with every document you have and present everything about your financial situation immediately,” Howard explains. “The first meeting should be about getting to know the adviser, their process, what advice they’re able to offer you, and how they charge for their advice.

“If you feel from this meeting that their advice is something you can benefit from and that they’re someone you can trust and want to work with, you go from there.”

The first meeting with an adviser is often offered at no cost, but the Australian Securities and Investments Commission (ASIC) advises consumers to ask their adviser to set out future charges as a dollar sum, not just as a percent of investable assets.

“Advisers charge fees based on the type of advice being provided,” ASIC adds. “For example, advice around a single issue, such as choosing an investment or consolidating your super, will cost less than comprehensive advice that takes into account all of your personal circumstances.” 

Follow-up meetings

Depending on whether you decide to receive advice on a single issue or as a more comprehensive overview of your financial situation and plans, subsequent meetings will involve examining your current financial position at the appropriate level of depth, then discussing your objectives. The adviser will then explain what you need to do to achieve those goals.

These meetings are an opportunity for you to ask as many specific questions as you wish, Howard says, adding that common issues that are discussed include how to:

• Structure current and future superannuation contributions to achieve a desired income
• Decide whether to create an income from super and/or withdraw a lump sum
• Manage investments across a wide range of assets outside super
• Choose the appropriate time to draw down on super or liquidate investments
• Structure assets to produce a specific outcome such as combining a super retirement stream and the Age Pension.

Your adviser will provide you with what’s called a Statement of Advice (SoA) that sets out your current financial circumstances, their understanding of the goals you’ve discussed, their recommendations to you and what outcome you can expect if you follow those recommendations. You may be charged directly for this statement, or the adviser may ask your permission to take the charge from the balance of investments.

ASIC cautions that even if you choose not to follow the adviser’s recommendations, you’ll be charged for the SoA. If you do decide to follow the recommendations and that involves making financial transactions on your behalf, the adviser will also charge you for this.

“The cost of advice can vary greatly, based on the complexity of your needs,” Howard says. “It’s a matter of speaking to a couple of advisers to see if they offer the service you’re looking for, understanding how they charge and making a decision on whether you see value in what’s being offered.”

He emphasises that every financial adviser is legally obliged to offer advice that’s in their client’s best interest and is independent of any influence from remuneration the adviser may receive from any financial product provider.

Regular reviews

As with most relationships, a long-term one with your financial adviser is likely to be the most fruitful, particularly if you’ve chosen to receive comprehensive financial advice. This usually involves setting up meetings at least every year to review your progress on following the adviser’s recommendations and tweaking them where needed.

“Establishing an ongoing relationship is where you get absolute value from your adviser because they can consider changes in your personal circumstances right through to changes in the economy and how they’ll impact your desired outcome,” Howard says.

Some advisory firms offer additional avenues of contact, including the opportunity to receive more frequent advice online or by phone, through regular newsletters or at client seminars.

There will be a charge for review meetings as well as these other forms of contact, so ASIC cautions consumers to ensure they understand what additional costs may be incurred and ask not to receive or to discontinue communications that they don’t find useful.

As for finding the right adviser, Howard recommends asking family and friends if there’s someone they’d recommend, or using a comparison site such as the one offered by the Financial Planning Association that will direct you to local advisers. BTFA offers a search engine called Adviser View that allows you to see the qualifications of your local advisers and read reviews about their service.

As BTFA’s Howard says, “retirement is something to look forward to and financial planning will only help you increase the probability of doing exactly what you want to do when the time comes”.

Do you use a financial adviser? Have you been satisfied with the results? Or do you prefer to do your own financial research and planning?

Things you need to know: BT Financial Advisers are representatives of © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian Credit Licence 233714 (Westpac). BT Financial Advice is a division of Westpac. The information in this publication is general information and factual only. It does not constitute any recommendation or financial product advice. The information has been prepared without taking into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This information may contain material provided directly by third parties and has not been independently verified and Westpac Banking Corporation is not in any way responsible for such information.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.