Spending money is easy. Everything else… Well it can get complicated quickly.
But how do you know who and when to trust your money in someone else’s hands? Or when to actually fork out some money to pay for that advice?
Where to go depends on the help that you need. The short version is that you can actually get great free financial advice from a financial counsellor.
If your needs are more complex (read that as, you have money to play with) paying for independent advice might be appropriate for you.
We spoke to a counsellor and an adviser to find out the key differences.
Financial Counselling: the best advice can be free
Elizabeth Minter from the Financial Counselling Association breaks it down.
Cost: Free – there are no fees, charges or commissions
Where do I find one? Via Financial Counselling Australia; the National Debt Helpline (1800 007 007) or the National Debt Helpline website (ndh.org.au).
What kind of advice do counsellors give?
Ms Minter explains financial counsellors advise people of their rights and options regarding their debts; they offer strategies for tackling financial difficulty, including asking for payment moratoriums; and they can look at ways you may be able to increase your disposable income. An unexpected life event like losing your job or a relationship breakdown often causes financial hardship.
“If you are struggling to pay the mortgage or your bills or facing bankruptcy, or having difficulty meeting commitments on your personal loan or credit card, free, independent and confidential financial counselling services can help,” Ms Minter says.
When do you contact a counsellor?
When you’re in financial difficulty, and the earlier the better, because then you have more options to tackle your debts.
Ms Minter says financial counsellors who work on the National Debt Helpline speak to people from all walks of life who are in financial hardship.
“We speak to people who receive a Centrelink income and are struggling paying day to day bills. We also speak to people who may have significant assets but still find themselves in hardship. A loan changing from interest-only to principal and interest can be a trigger, for example.”
Financial Adviser : pay money to grow your money
Independent Financial Adviser Susannah Kulincevic explains when it’s worth paying for advice.
Cost: $0 to $thousands – financial advisers
Where do I find one? The IFAA website has a list of financial advisers. The “Independent” tag means they might cost more up front, but they won’t be pushing you into products they receive a commission on.
What kind of advice do advisers give?
There are 10 key areas of advice you may need: goal funding, retirement funding, cash flow management, debt management, taxation, insurance, legal/estate planning, superannuation & pension, investments and Centrelink.
Ms Kulincevic says: “The role of a financial adviser is to provide you with impartial and conflict-free advice and give direction and clarity by keeping you financially organised in each of these areas which give you the highest probability of achieving your financial goals.”
How do I know they are good?
Ms Kulincevic says the key to ensuring you are being given impartial advice is to ask how your adviser gets paid.
“For a financial adviser to practice impartially and without conflicts, they 1) must not accept commissions as a form of remuneration, 2) they must not charge a percentage of your assets – this is precisely how a commission is calculated, and 3) they must not have any ties to a product manufacturer (eg. AMP, MLC, etc).”
When do you contact a adviser?
“When you are feeling a little directionless and need to seek some clarity,” Ms Kulincevic says.
“Seeking financial advice is particularly valuable for those who are goal driven and would like to take control of their financial destiny. This can be triggered when you’re going through a big life event like starting a family, being retrenched or managing an inheritance, even less immediate goals like growing your super or planning for retirement.”