The true value of financial advice

Money and Life
(Financial Planning Association of Australia)

Does investing in a financial planner really pay off? According to the latest research from Sunsuper you could be thousands of dollars better off when you make choices based on professional financial advice. Plus you'll take more family holidays, have greater peace of mind and more confidence in your financial decisions.

Teaming up with research experts, Core Data, Sunsuper have released The Value of Advice Report. Insights include financial forecasts for three couples at different life stages and the lift in living standards and retirement expectations they're enjoying as a result of seeking advice. In all three cases it's very clear that financial advice has a real and immediate impact on their lifestyle, and creates opportunities to achieve important personal goals.

1. Building a bright future for a young family

Adam and Mara's goals for their family of four aren't out of the ordinary. Paying for private education and taking regular holidays are things that many families might prioritise but struggle to achieve when they're paying off a home loan and juggling work and family commitments.

Thanks to advice from a financial planner, Adam and Mara have settled personal debt, made appropriate investments to provide extra income for holidays and school fees, and arranged suitable insurances to make sure they're secure in the event of injury or illness.

Expected financial benefits from implementing their plan include:

• Cover private school fees starting from primary school (instead of high school only)
• 32 family holidays before retirement
• An additional $54,720 in assets held at retirement

2. More time to travel in their prime

Heading down the home straight towards retirement, Amanda and John love to travel. They're currently focused on their careers, but keen to be living a good life, now and in the future. Having enough to provide for their children in their will is also an important goal.

Following financial advice has allowed Amanda and John to manage their debt more effectively and ensure they're covered by insurance in case of illness or injury. Their new strategy would also see them put more income into a holiday fund and their super savings.

Expected financial benefits from implementing their plan include:

• Savings of $5k pa into a holiday fund for an extra 17 trips in their lifetime
• Increased life and TPD insurance cover to match debt and income needs
• An additional $78,720 in assets held at life expectancy that will benefit their children

3. Staying comfortable and independent in retirement

Having recently reached retirement, Jocelyn and Lou want to ensure they can continue to meet living and medical expenses and enjoy their senior years without financial stress. Not becoming a burden to their children is important to them and they'd like to retain assets to pass on to the next generation instead of having to sell them to generate more income.

With a new financial plan to guide them, Jocelyn and Lou can eliminate debts and reduce the burden of interest and loan repayments on their cash flow. They've also found ways to reduce their annual budget and still save money towards holidays.

Expected financial benefits from implementing their plan include:

• Savings of $5k pa into a holiday fund for an extra 11 trips post-retirement
• $47,250 of savings in interest on current debts
• An additional $7,237 in assets held at life expectancy that will benefit their children

Face your fears and feel better about finances

As well as looking at modelling for these three couples, Core Data also surveyed 1000 Australians as part of the research project. Of those who received advice, 80% said they felt more confident making financial decisions as a result and the same proportion believe advice has brought them more peace of mind. And 75% take a view that financial advice is worth more than it costs.

In spite of these clear benefits to wealth and wellbeing, nearly nine million Australians have unmet financial advice needs, according to Anne Fuchs, Head of Advice and Retail Distribution for Sunsuper. So what's holding them back from seeing a financial planner? "Many people end up too scared to reach out to a financial adviser for fear they don't know enough, don't have enough or will be told their dreams just aren't achievable," says Anne. "This can leave many people to suffer in silence, not knowing what to do or who to turn to for help."

Reaping the benefits of advice at every life stage

For others it can be a case of leaving it until retirement, because they're too busy and managing their money well enough while they're earning a regular income. But the benefits of financial planning can be enjoyed now, and later, according to CoreData Principal Economic Researcher, Andrew Inwood. "Good advice does of course make you wealthier at retirement, but it also adds value all the way through your life in the choices you can afford to make about schooling, insurance, holidays, housing and personal interests," says Andrew.

"The important thing to measure is how it adds value to every life stage and enables individuals' life aspirations that's what we have modelled."

Not sure whether you've reached that life stage where you need support and advice from a financial planner? Discover 5 good reasons you might have for seeking financial advice. And if you are ready to make that first appointment, find out how to make sure a planner is the right one for you.