If your car breaks down, you take it to a mechanic. If a pipe bursts, you call a plumber. And if you crack a tooth, you pay a dentist a visit. But who do you call if you need help with money matters and how do you find someone you can trust?
Well, it depends on what you need advice about. Effie Zahos, a money commentator at Canstar and Channel Nine’s Today, takes a look at some common money issues and your options.
Need help with a home loan?
Where to get help: A mortgage broker is probably your best port of call. They’ll be able to help you find a home loan that suits you, can recommend a lender likely to say yes and also guide you through the entire process – from telling you what documentation you need and applying for the loan through to settlement.
To find a mortgage broker, consider asking family and friends if they have any suggestions. You could also visit mortgageandfinancehelp.com.au, which will help you look for a broker accredited by the major industry body, Mortgage & Finance Association of Australia.
What you need to know: Meeting with a few different mortgage brokers before settling on one can be a good idea. Go armed with a list of questions.
Some examples are:
• How much experience do you have as a broker?
• How many lenders are on your panel and which ones are they?
• How are you paid? Do you get the same fee regardless of the loan or lender?
• How will you find the best loan for me?
• Are you licensed? (It’s also a good idea to check their license yourself with ASIC.)
It’s important to note that some of the cheapest loans are not sold through brokers as they may not pay a commission so it’s essential to do your own research too.
How much you’ll pay: A mortgage broker generally won’t cost you anything. Most make their money by earning a commission from the financial institutions whose products they sell.
Want to start investing?
Where to get help: If you’re just starting out, then you may consider using a robo-advisor. You’ll complete an online questionnaire and the automated online service will recommend an investment portfolio, usually made up of different ETFs.
Some of the biggest robo-advice platforms in Australia are InvestSMART (I sit on the board of directors), Stockspot, Six Park and Quiet Growth.
What you need to know: The robo-advisor makes all the investment decisions for you which can be great when you’re getting started but this means you can’t buy individual shares or choose which ETFs you want to invest in so you have limited control.
Robo-advisors also can’t provide tailored advice that takes into account your current personal financial situation and future goals.
It’s also worth noting you’ll need to have a certain amount of money to get started. Stockspot and Six Park, for example, have a minimum initial investment amount of $2,000, QuietGrowth asks for $3,000 and you’ll need $10,000 for InvestSMART.
How much you’ll pay: Fees vary between providers and are generally based on the value of your portfolio. To give you an idea InvestSMART charges 0.55%pa for investments up to $100,000. So, if you had $10,000 invested you’d pay $55 a year.
A good way to compare fees between providers is to work out how much you’d pay based on the amount you plan to invest.
Have questions about your super?
Where to get help: You have a couple of options. One is to see a financial adviser (see next point on retirement planning for tips) and another is to go through your super fund.
What you need to know: There are different levels of advice offered by super funds. You can get simple, personal advice about your existing super account such as switching between investment options or the best way to make extra contributions to your super over. This is generally done over the phone.
You may also be able to get more tailored, comprehensive financial advice about your super as well as financial issues outside of super. Not all super funds offer this option though.
Some super funds employ their own in-house advisers and some use external advisers. You should ask them about their experience and qualifications and how they are paid.
How much you’ll pay: For most simple advice you won’t be charged anything as it is considered intra-fund advice and is covered by the fees you and other members have already paid. If your issue is a little more complex it may fall under the category of “limited” or “scaled” advice and you may have to pay a fee.
A survey by ASFA found that the minimum fee for scaled advice varied from zero to $1,750, with a median fee of around $350. For full personal advice, the minimum fee varied from $470 to $4,500 with a median fee of around $2,500, according to ASFA.
Need help planning for retirement?
Where to get help: A financial adviser, also referred to as a financial planner, can help you develop a plan for retirement. They can also offer advice on a range of other topics including building a diversified portfolio, life insurance, superannuation and estate planning.
Asking friends and family for recommendations can be a great place to start your search. Another option is to find one that’s a member of a professional organisation such as the Profession of Independent Financial Advisers or Financial Planning Association (FPA). Both their websites offer a tool that helps you find members near you.
What you need to know: One of the most important things to do, even before having an initial meeting, is to check if the adviser is licensed. You can do this using the ‘Financial advisers register’ on the Moneysmart website.
You should also look at their Financial Services Guide (which you can usually find on their website) to find out how they charge fees and who owns the company to ensure there are no conflicts of interest.
It can be worth meeting with a few different advisers before picking one. It’s important to find someone with who you feel comfortable. Some of the questions to ask at that initial meeting include:
• What are your qualifications?
• How long have you been giving financial advice?
• Do you have a specialty area?
• What types of products do you offer advice about and are there any products you don’t advise on?
• How do you charge fees and how much will the advice cost?
• How often will we need to meet?
How much you’ll pay: Different advisors use different fee models. As a guide, FPA members were charging, on average, $2,671 to prepare an initial statement of advice for new clients in 2019.
And Adviser Ratings found that the ongoing fee for advice ranged from $800 to $12,000 in 2021, with the median sitting at $3,529.
NOTE: Any advice provided is general advice and does not take your personal circumstances into consideration. Readers should seek their own financial advice.