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If you are looking for a financial advisor in Perth, you have probably noticed that there are a lot of choices out there. Financial advisors are bound by a concept called “duty of care.” The concept of having a “duty of care” is communicated in many different ways by statutes involving the provision of financial advice.

What is “Duty of Care”?

“Duty of care” basically means that your financial advisor is required to look out for your best interests and inform you of developments that may increase the risk of any investment they have recommended to you.*

Swan and Baker Pty Limited vs. Marando

It is best illustrated by a decision which was upheld by the NSW court of appeal last year: Swan and Baker Pty Limited vs. Marando. A financial advisor and the firm he worked for were accused of misleading and deceptive conduct by two investors. They were also accused of a breach of professional duty because they had provided negligent advice.*

In 2008, Mr and Mrs Marando invested $500,000 in the City Pacific Ltd Mortgage Fund on the advice of accounting firm Swan & Baker. The funds were to be invested for 90 days and available for reinvestment after the term had elapsed. Swan & Baker gave the Marandos a copy of a document called the Fund Product Disclosure Statement. Within the statement was a 14-day “cooling off” period that applied to new investments.*

The Financial Planning Association of Australia (FPA) cited a recent Government document as confirmation that all Australians need professional financial advice. As a firm that has provided financial planning help in the Perth area since 2005, we have always felt that a good financial planner can make a difference in anyone’s future.

2015 Intergenerational Report

The document in question is produced by the Treasury: the 2015 Intergenerational Report (IGR). According to the IGR, life expectancy will increase greatly in the next forty years. At birth, men are projected to have a life expectancy of 95.1 years, while women can expect to live 96.6 years. Today’s life expectancy at birth is 91.5 years for men and 93.6 years for women.*

The end result is that, by 2055, the ratio of working Australians to those who are over 65 will be 2.7 to 1. Today, that ratio is 4.5 to 1. In 1974/75, for comparison, it was 7.3 to 1.*

Mark Rantall, who is the FPA’s CEO, feels that it will be important for Australians to maximise their superannuation funds to rely less on age pensions. According to Mr Rantall, “The IGR makes it very clear that [those with higher superannuation savings are less reliant on age pension].”

We have more than 40 years of combined experience in providing financial planning to the Perth area, but even we were surprised when we found a little-known research paper authored by Kym Irving from the Queensland Institute of Technology in 2012. The article was subsequently published by Australasian Accounting Business and Finance Journal in their special issue on Financial Planning.

According to Ms Irving, the traditional six-step process of financial planning not only impacts clients mechanically through results, but psychologically, too. One of the central themes of the article is that the physical reality of improved well-being also results in a better psychological sense of well-being.

The Six-Step Process

The very nature of financial planning is that it helps individuals create a series of positive, goal-oriented outcomes by helping them manage their funds and ensuring that they meet their financial goals. Ms Irving used a six-step model of financial planning that included:*

If you work with a financial advisor in our Perth office, one of the first things you will probably be asked to do is to figure out your monthly expenses. There is also a pretty good chance that your financial planner will advise you to create a budget.

Knowing monthly income and expenses is one of the first steps to getting a handle on your financial situation. The better you are at this, the easier it is for a financial planner to provide you with your desired results.

Why Track Spending?

Usually, when someone tracks their spending accurately, it is a true eye-opener. They usually find a lot of surprises and have no idea they were spending so much money on entertainment or any of many other things. Accurate tracking allows you to see exactly what you are spending instead of guessing based on what you want to remember.

What to Do

Spending is easily tracked on your smartphone. Both iPhone and Android have plenty of apps to help you easily and accurately track every bit of money you spend. If you don’t like any of the apps, you can create a spreadsheet or just use a piece of paper.

Financial advisors in Perth are nearly ubiquitous. There are seemingly so many financial planners around that we can get “placed on the back burner” by many. As a result, people who have worked hard to make a good amount of money may just be letting their money sit in bank accounts and making a minimal amount of passive income.

Our Process

At Approved Financial Planners, we make it easy for you to invest. We require an individual consultation and some basic information. We will assess your risk tolerance. When we have taken all of your individual factors into consideration, we will devise a financial plan that makes sense for you.

We will present that plan and with your permission, execute it for you. You spend minimal time and effort but are able to reap the benefits of our financial planning. After we know what you want, we can research investments for you and do all of the paperwork. That means all you have to do is sign the documents.

At Approved Financial Planners, we help minimise your market risk by diversifying your investment portfolio. We do check in on a regular basis so that we can adjust your investment strategy to fit your goals, current lifestyle and financial situation.

We provide a full range of financial planning services to our Perth clients, but one of the first things we will probably ask about is your level of debt. At Approved Financial Planners, we have a firm belief that the road to effective financial planning begins with taking charge of your debt level and your monthly expenditures.

We can help you set up debts such as credit cards, student loans, leases, mortgages and personal loans in a way that helps you minimise interest payments that could be spent towards securing your future.

Debt Reduction: the Plan

We will recommend that you ask yourself a series of questions to determine how much you know about your current debt load. This will help you determine exactly where your money is being spent and how much interest you are paying each month. If you don’t already have a debt reduction plan, we can help you formulate one.

We can work with you to create a plan that includes a date for paying off your loans and how much money you want to owe at various milestone dates such as five years from now.