Financial Planners

When we are providing our clients with financial planning services from our Perth office, one of the more important aspects is the ability to borrow money for a home, a car or other needs. This piece is one in a series we are doing where we give you a shortened, easy to read version of what ASIC has to say about various aspects of household finance.

All information provided here is general and compliant with ASIC regulations.

Can You Afford to Borrow?

ASIC advocates making sure that you can afford repayments before taking out any loan and they recommend the following questions.*

What am I Borrowing This Money For?

Is it to pay bills or debt? Is it to help friends or family? Is it something you really need or is it something you just want?*

Is Borrowing the Best Choice?

Do you have any option that doesn’t involve borrowing? Can you save for the item and pay cash? Can you put it on layaway and pay it off later?*

Financial advisors have become ubiquitous in Perth and for good reason. The current financial climate can be confusing with so many options and variables. More and more people are turning to professionals for help in managing their money. There are a lot of financial advisors out there and we are constantly asked how clients know they are choosing the “right” financial advisor.

We thought it might be productive to provide you with what the government has to say about finding a financial advisor. Remember that all information here is general and that none of it should be taken as specific financial advice or as a substitute for a personal, one on one meeting with a financial planner.

Referrals

The Australian Securities and Investments Commission (ASIC) notes what they feel are the two best places to find referrals: The first is professional associations. They mention the Financial Planning Association and The Association of Financial Planners, for example. Their second choice is to ask people you know if they are satisfied with their financial planner. When you find one who is happy with theirs, you can ask for the planner’s name.*

At Approved Financial Planners, we offer financial planning and other services to residents in the Perth area and across WA. We now have the benefit of having AMP Australia as a parent company. We chose to partner with AMP because they embody the same commitment to professional, ethical service that we do.

We are on the side of high standards for the entire financial planning and financial advising industry, making AMP the perfect parent company for us. Consequently, we were proud to hear of remarks made by AMP Limited CEO Craig Meller recently, addressing what our industry currently defines as “financial advice.”

Mr Meller was speaking about vertical integration, a model practised by AMP. During the speech, the subject of financial advice arose. He questioned the nature of financial advice as practised by many in the industry. According to Mr Meller, “Too many…self-interested parties…dumb down the definition of financial advice to (only include) product selection.” *

Mr Meller would go on to opine that this kind of “advice” was usually meant to “justify a certain position” and that it is “a million miles away from where the true value of advice lies.” *

Financial planners and advisers in Perth and across Australia were quite interested in a recent statement from Senator Mathias Cormann, Minister for Finance and Acting Minister for Financial Services. According to Senator Cormann, the Australian Securities and Investment Commission (ASIC) is legally empowered to decide when and how to raise the minimum educational standards for all financial planners according to its own criteria. *

Senator Cormann made the statement in a radio interview in Sydney when asked about the Government’s recent changes to legislation known as “FOFA” or “Future of Financial Advice.” Many within the industry have criticised current conditions as allowing people to complete a four day course and then call themselves “financial planners.” *

Senator Cormann not only said that the Government is interested in raising educational standards for financial planners, but that ASIC could also raise the standards if they wished. According to Senator Cormann, “ASIC actually has the responsibility to set the minimum educational standards.” Senator Cormann then encouraged ASIC to raise standards if they feel it is appropriate. *

Senator Cormann said that the Government is working hard to “lift professional, ethical and educational standards” for financial advisers and that the Government is also working on an “enhanced public register of financial advisers.” *

If the Financial Planning Association of Australia (FPA) has anything to say about it, the educational standards for financial planners and advisers, in Perth and across Australia, are about to receive a boost. As far as we are concerned, it can’t happen fast enough.

Approved Financial Planners and AMP

We would like to give a little background. Approved Financial Planners and our parent company, AMP, are on the record as being in favour of educational reform for the financial services industry. We have felt for a long time that the standards for entering the industry, both in Perth and nationally, are not stringent enough.

AMP has internal standards that are far more stringent than industry minimums. That is one of the main reasons we decided to partner with them. We feel that it is our responsibility to educate ourselves fully about the products we offer and about how our decisions affect our clients’ well-being.

One of the sadder parts of being a financial adviser in Perth is listening to clients tell us how other financial advisers had mismanaged their funds, either out of ignorance or out of a lack of ethics. We find both of these situations to be unacceptable.

If you are new to financial planning, don’t feel bad; you have company. There are plenty of people in WA who haven’t taken control of their finances yet. Luckily, Approved Financial Planners can get you started on the right path.

Recently, the Financial Planners Association of Australia published a blog post discussing how to develop a financial plan and what factors should be taken into consideration. All of the factors they cited are factors that we like to take into consideration when helping a family develop a financial plan. Here are five crucial factors that we consider.

Your Priorities

Everyone’s situation is different. Everyone has different dreams and goals. Everyone is starting from a different position. Some people want to create more family time now. Some want to ensure their family’s future. Many figure out a way to carve out a good future without sacrificing their entire present.

Your Cash Flow

Since it is called “financial” planning, your financial position will mean a lot concerning the direction and scope of your plan. How much money do you currently make? How much can you afford to invest? Do you have a “buffer” in case something forced you to go without income?