What is Advice Worth?

By Jason Fittler

All too often we value advice based on what it costs us.

Advice is not about the hourly rate charged, it is about the benefit you gain.

All too often I see advice-based products sold as if they were a retail item. People go for the cheapest price. Advice is not a retail item, not all advice is the same, and you get what you pay for.

In the average person’s life there are two major financial assets they will own, their house and their superannuation. Most do not receive advice on either. 

When it comes to your superannuation it is a very complicated structure, but also a very powerful tool to build wealth. It is the very nature of Superannuation, which demands that you seek professional advice and continue to obtain ongoing advice. It is the difference between an average retirement and a great retirement.

Time for a dig at industry funds!

Their claim is that that they are run for the members as such they are cheap. This is true however there are now a number of products in the market, which are just as cheap, but you will receive ongoing advice.

Many investors due to a lack of knowledge believe that all advice is the same as such they are happy to pay a 1% fee for nothing instead of paying 2% but actually getting advice/service for their money. They are trying to apply retail-shopping practice to an advice-based service.

Advice is about future savings and benefits. Advice is about giving you a clear path to achieve goals be it financial or other. When it comes to superannuation the key issues are around salary sacrifice, tax reduction, concessional and non-concessional contributions, TTR Pensions, account based pensions, investments types and what to do once you have retired.

At age 65 the average male will have $200,000 in super person and female will have $110,000 this will mean that their standard of living will fall in retirement.

To have more, you need advice on where to invest and how to save in the most tax effective manner. This advice can make all of the difference and the tax saving along the way will more then cover the cost.

It is important to have a good relationship with your adviser; as such there are a number of variables, which you should consider:

1. Price - cheap advice is cheap for a reason. A good adviser will not be cheap, as they are not buying the work. Be prepared to pay market price or slightly higher but to not fall into the trap that the higher the cost the better the advice.
2. Following advice – professionals provide advice to assist you, they building their business based on you achieving your goals and then recommending them to others. You can choose not to follow their advice, but do not blame them for any poor result from not following their advice.
3. Second-guessing – once the advice is given, either take it or go for another opinion if you do not like the advice. Second-guessing to try and make the advice fit what you wanted to hear. 
4. Act quickly – most advice is given especially in relation to investments has a limited window of opportunity. Those clients who respond quickly to the advice will achieve a better result. It will also mean that the adviser is more likely to contact you first when an opportunity arises. 

If you would like our advice please call us (07) 4771 4577.