Jonathan Cattana: How much will a financial advisor cost?

How much will a financial advisor cost?
There are two ways financial planners charge:
• A fee for service – a yearly fee or a percentage of your assets invested whereby you are managed at all times by your adviser. If there are any investment commissions or trailing income paid they are rebated back to the client:
• Commissions and trail commissions – this is where the adviser is paid via a product supplier in order to pay for the client’s cost.

Would you pay an adviser a yearly fee? This is purely your decision and sometimes a planner will only work in one particular way anyway. What is required by law though is that they give you a written Statement of Advice (SoA). This term has replaced the more common term ‘financial plan’.

What does a good financial advisor do?
First, all advisers want their clients to succeed. A financial planner provides strategies to help you be on the right road map for your personal and financial goal whatever they are.

For example, what are your goals? If you look at your children as an example, there are a few life goals that your child will go through which your financial adviser can help you plan for:
• school education.
• university education.
• an investment portfolio which may be invested in their first property
• funding their wedding
• assisting them to purchase their first home.

[Insert Road Map – to come – Margaret to do]

A financial adviser ensures that along the way towards saving for your life goals, nothing is left to chance. You have an end result and you simply work backwards and plan every last detail.

This does not mean that you, the client, needs to know all the strategies and legal and tax implication—that’s the planner’s job. However, the client needs to be aware of the disciplines of managing their own cash flow. Cash flow management is the main driver and the separator between success and failure in any financial objective.

A financial planner cannot guarantee returns (if one does then run the other way quickly). The role of a financial planner is to demonstrate the relativity of market returns between the asset classes you are looking to invest in.