When do you need financial advice?

So you’re interested in investing or have saved a large amount of money and are not sure what to do next. How do you know if financial advice is right for you? Glen James weighs up on when to seek advice in this edited extract from his book, Sort Your Money Out & Get Invested.

Where do you go to get your financial advice?

Believe it or not, sloppy_28 on Reddit (sorry to ‘sloppy_28’ if that’s a real user, lol) doesn’t know your financial situation, nor does it have a complex understanding of tax, estate planning, investing principles, ownership structures and further how they all work together with your goals and aspirations.

sloppy_28 may just have an opinion and may not have had a job for a year. They may be deep in consumer debt and still living in a granny flat on their uncle’s property. If you’re looking for financial advice on internet forums, somehow, I don’t think sloppy_28’s opinion matters that much.

Would you rather get financial help from someone who is successful with money and knows what they are talking about or not?

How do I know if I need to see a financial adviser?

While financial books and articles by qualified, experienced professionals are intended to give you a greater understanding of how the investing world works, I would still encourage you to speak with a financial adviser as your income and wealth grows or your circumstances change.

Not everyone needs a financial adviser, but everyone needs a financial plan. If you even received some one-off advice, that would be beneficial to point you in the right direction.

After you read this, I want you to go to ‘Vanguard Adviser’s Alpha’. Vanguard is primarily known as a passive fund manager — you’d think that a passive fund doesn’t need a ‘financial adviser’, right? But a financial adviser isn’t a fund manager or stockbroker. They help identify your goals and objectives, keep you on track and are a logical sounding board when everyone is telling you that you’re crazy.

Vanguard has done research over many years on the value of financial advisers and they have developed their Vanguard Adviser’s Alpha. Alpha means ‘to beat the market’.

In a research report from March 2019, Vanguard suggested that by having a financial adviser you would have a 3% higher return over the long run. Not necessarily because they have selected the ‘best’ investments, but because they have kept clients on track and encouraged them not to sell out of fear and emotion when markets are choppy!

It’s been my view that professional advice should always pay for itself, whether it’s legal and tax advice on the structure of an asset (so when you sell, tax is minimised) or purely to stop you from selling your investments when the news is telling you that there is a stock-market crash.

What should I do before seeing an adviser?

I would recommend that you be on the way to having no consumer debt, have a spending plan in place and think about your goals before you reach out to an adviser.

This is an edited extract from Sort Your Money Out & Get Invested (Wiley $32.95), exclusive to Canstar, and republished with permission.

Cover image source: Ninelif/Shutterstock.com


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Glen James is the creator & host of the My Millennial Money podcast, a popular Australian personal finance podcast, Glen is a now-retired, multiple award-winning financial adviser with experience helping countless people get on top of their finances.

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