At Oracle Advisory Group, we understand that not everybody understands the language at finance.
We also recognise that seeing a financial advisor for the first time can be duanting.
That’s why we’ve compiled this list of frequently asked questions so you can know exactly what to expect on your first meeting and beyond.
And if you have any follow up questions, please feel free to email us.
As Financial Advisors, we specialize in maximising our client’s financial resources to benefit them now and in the long-term. To do this we assess your goals and objectives to gain a clear understanding of your stated financial needs.
From this we then assess your available resources, quantify your investor risk aversion profile and from there create a road map, Financial Plan, to reach your goals. Throughout this process we engage you ensuring your understanding of our strategies, how each combine to bring your situation together, and the level of financial independence you may enjoy in the future.
Here are the main strategy areas we help to develop with you:
- Identify short, medium and long-term goals.
- Develop strategies to achieve your financial
- Better manage your money.
- Develop an investment
- Choose tax-effective investments.
- Make the most of your superannuation.
- Look at how best to insure yourself to protect your estate.
- Findout if you’re eligible for any government assistance.
One important thing to clarify is that as every client are individual and different in their own way, so to is the plans we create for them. No two plans are usually the same and this important. Creating a working relationship of trust and respect is crucial to maximising the benefits of the plan, and to do this right the most important aspect of a good plan is getting the foundation right.
Financial foundations are the building blocks to wealth and success and everyone needs these in place to grow effectively.
This is in terms of:
- Cash flow & expenditure control
- Creating of a family budget & savings strategy
- Investment growth inside & outside Superannuation
- Insuring yourself as a plan B in the event of accident, illness or premature death, and
- Estate Planning strategies – creating a Will and Testamentary Trust if required
A big misconception in the financial field is that you only see a Financial Advisor when you have money for them to advise you on. Wrong!
There are three main life stages you should think about seeing a Financial Advisor:
- During personal changes to your life
- Getting engaged, married, having children
- Any wealth changes to your life
- New job, promotion, significant pay increase or inheriting money
- For emotional help
- In such events such a financial and/or family crisis, in terms of health, wealth wellbeing, transitioning to retirement or aged care facilities, deaths in the family etc.
Having the support of a trusted advisor throughout any or all these life stages can dramatically help your situation and the situation of those around you.
Essentially there are six steps to a Financial Plan:
- Establish the client-advisor relationship and define goals and objectives
- Gather information
- Analyse your overall financialsituation
- Develop the plan
- Implement your plan
- Monitor your plan
A good Financial Planner will be appropriately diploma and degree qualified in a finance related fields, experienced in a range of advice services and able to demonstrate that he/she has listened to their client, understood their needs and able to provide solutions to these needs, goals and aspirations of the individual client.
They will back that service up with ongoing services that show they care about the clients’ financial well-being and peace of mind.
Our Financial Advisors are fully accredited and trained to provide advice on the following areas:
- Cash flow and budget advice
- Debt management advice
- Investment advice
- Superannuation advice
- Wealth accumulation advice
- Insurance advice – life, trauma, income protection and disability cover
- Estate planning advice
- Retirement planning advice
- Social Security advice
The best way to maximise the first meeting with our Financial Advisors is to be prepared.
This way it reduces the time it takes us to gather all the pertinent information and to create and implement your plan.
The main items required are:
- Assets & liability amounts
- Income e.g. pay slips or tax return
- Superannuation and investments annual statements
- Details of existing personal insurances
- Tax file number
- Photo identification
- Spouse’s and/or dependents’ details
Tailoring investments to each individual client is crucial for peace-of-mind and growth based on time horizon. This means that depending on their life stage, we gain an understanding of our client’s tolerance and adversity to risk and market volatility (Ups and Downs) by asking a series of questions as well as engaging in conversation to establish their knowledge, experience and comfort levels.
Once this is done, we discuss the results and look to create an investment strategy to suit each investor based on their short-term and long-term needs, time horizon, aversion to risk and complexity of investment needs. This is often not a simple process however is important to get right and adjust over time.
Time horizon is basically the length of time an investor is prepared to invest their money before accessing it. For example, a young personal in their 20’s investing in Superannuation will have around 40 or more years before they can access these funds and therefore has a long-time horizon.
Where a client in their 50’s looking to retire by age 65 has a shorter time horizon. With each of these cases we will look at investing differently based on their needs, objectives and aversion to risk.
The cost of creating a Financial Plan will vary depending on the complexity involved and the ongoing needs of the client and will be established at your initial meeting with our experienced financial advisors.
Our Financial Advisors are paid in a few ways depending on your individual circumstances. Typical though this is either a flat dollar or percentage-based fee.
The most important aspect to our fees structure is tailoring the fee to the client in a way that does not impact their investments or goals and enables them to gain the advice they need to prosper. Acting in the best interests of our clients is our mandate and making things fair and transparent crucial to our success.
Flat Dollar fees – These will differ depending on the complexity of your plan and the ongoing requirements you may have.
Percentage-based Fees – This can be an option where we charge a percentage (%) fee based on the level of investment you have that we manage or FUM (Funds Under management). This also can vary depending on the complexity and amount of funds managed. This is usually deducted from your investments over the year.
- this is a cost incurred by an investor only when they engage the services of a financial planner and only for the provision of ‘advice’: the fee is payable by the investor, usually after having negotiated the fee prior to taking the advice;
- advice fees may include the cost of implementation of the advice if accepted by the client, but most often is for the strategy to be involved;
- where the financial planner is to be engaged to provide advice, implement the strategy and report on progress towards achievement of stated objectives, this will be the first of a couple of fees that will have been negotiated at the outset of the engagement; and
ongoing service fees;
- Typical though this is either a flat dollar or percentage-based fee.
- This is a cost incurred by the investor when they engage a financial planner to provide an agreed suite of services (often including an annual review of the progress of the strategy towards achievement of the agreed objectives): the fee is payable by the investor, usually after having negotiated the fee prior to taking the advice;
- The service fee might cover supplementary advice during the year; it could also cover an annual (or more regular) meeting(s) with the financial planner; and will usually cover telephone and email requests for information/ updates of data – and may include many other services
Some other fees that an investor may be called on to pay by virtue of implementing an investment strategy include: –
- a cost incurred directly or indirectly to the agent for making a transaction for the investor – and correctly payable by the investor;
- incurred on share purchases/ transactions (whether directly; or through a managed fund or ETF)
placement (initial) fee;
- a cost incurred at the commencement of certain investments, covering account establishment and administrative costs for the investor’s account and appropriately paid by the investor;
- usually only applies to managed funds (and in the current environment, usually only when an investor deals directly at the retail level with the fund manager)
- can also apply to insurance bonds and annuities
- when applied through a Financial Planner, should be considered for offset against the initial advice fee
- costs incurred at various levels, but providing custodial services for – and reporting to the investor, services that the investor should feel comfortable to be paying for;
- accountants to compile the tax elements of income earned from investments (whether shares, managed funds, rental properties, or cash)
- accountants to determine the consequences of capital transactions on sales (whether gains or losses) and the taxation implications of those amount;
- investment platforms to attend to the above and provide a single report covering the activities for the financial year in a simple format
- investors seek or require various reports at various times each year: these reports are compiled from information made available from the managers of the various investments owned by the investors – and the costs can readily be seen to be properly those of the investor;
- accountants to compile returns received from investments, determining the performance of the portfolio
alternatively, financial planners to undertake any of the above roles
- usually payable where a direct transaction is undertaken by an investor using an agent or broker – acting at the investor’s direction but understood to be a cost of the product provider;
- where the investor acts through and advisor who is doubling as an agent, clear understanding should be held as to the role the advisor is to take;
- commission is paid by ‘the principal’ (the provider of the product) and is not separately charged to the investor (and in many situations, does not influence the price paid);
- instances where commissions arise include direct share transactions, direct real estate transactions and insurance product sales
- these fees are incurred when a portfolio is managed to prescribed expected outcomes, providing a bonus to the investment manager when the performance of the assets they manage exceed given levels: the fee is deducted from the earnings of the investment and is considered to be a cost to the investor, but only in situations where they benefit from higher returns – and are accepted as being an indirect cost of the investor;
- they are most often found in a limited range of managed funds
- some financial planners and brokers negotiate such fees with their investor clients (but this is not a practice of this firm)
- this revenue item flows to financial planners in some situations: it is paid when the volume of sales of a particular product or service exceeds pre-determined amounts: it is a cost incurred by the product/ service provider and not a direct cost of the investor;
- these fees are usually associated with managed funds and flow to financial planners through their Dealer Groups and/ or managed funds directly;
- newly-introduced legislation(March 2012) restricts circumstances where this fee can be passed to financial planners – it is yet to be seen whether this will reflect in savings for investors
Many of the fees from the latter group above, will be payable by an investor regardless of whether they use a Financial Planner or operate on a DIY basis: the difference is often that a Financial Planner can provide access to a more diversified portfolio because of their affiliation with various product providers – and in many cases, the additional costs are minimal because they are provided at a wholesale level rather than at retail charge.
This will depend on the complexity of your financial plan and personal or business needs. Typically, we start with the initial financial plan to establish a roadmap for your future and then discuss your ongoing needs.
Because life changes, so to should your plan and understanding your needs is important to tailor the right service agreement to suit that will provide you with scheduled, regular reviews of progress towards your goals. This will be established after you have your initial meeting with our experienced financial advisors.
The biggest step in your financial life will be getting started. The fact is that not everyone is good with money. Creating strategies in each sector of your finances can be daunting and many people don’t bother and find themselves living from pay check to pay check and never getting ahead.
Like anything in life if your plan for it you’ll succeed. Often it can be easier to get a specialist involved who has experience in structuring your finances correctly. Structure is the key here as well as starting the process.
How do you do this? Simple. This is done by consultation and discussions and doesn’t take long. Having a conversation doesn’t cost you anything and can be the best first step you make.