Tell potential clients what financial planners do, says Galagher
As the financial planning industry moves towards a fee-for-service environment, there is a pressing need to ensure clients understand exactly what they are paying for, according to Equity Trustees head of wealth management Phil Galagher.
At the moment there appears to be a gap between what potential clients want and the services planners actually provide, said Galagher.
Considering that a direct link between the adviser service and the cost to the client is being established under fee-for-service, it is important for new clients to have a good understanding of what planners do, Galagher said.
"There is a great deal of anecdotal evidence that people first visit advisers expecting specific investment advice and opportunities that will give them an immediate return advantage over other investors, or investment knowledge they did not have before," he said.
Potential clients ought to be particularly suspicious of any adviser who hints at especially high returns, he added.
"Much of the advice role covers aspects such as helping set up finances, explaining what needs to be done to manage and protect wealth, how to avoid paying unnecessary tax, and how to take a disciplined, long-term view to wealth creation," Galagher said.
The industry needs to promote the holistic approach to service that planners take, he said. The role of the planner includes estate planning, setting up investment vehicles, catering investments to individuals' needs, and creating a saving discipline, he said.
"Australians increasingly need advice and help because of complex tax and superannuation rules, increasing superannuation balances through superannuation guarantee contributions, and the need for increasing retirement savings. Financial planners need to create broad understanding that this is what they are able to help with," Galagher said.
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