The Role of a Financial Advisor

For many Australians the extent of their retirement savings plan does not extend further than compulsory employer superannuation contributions and the family home. While the first step towards maximising retirement savings is the engagement of a financial planner there are limitations that may reduce the effectiveness throughout implementation of the plan. It is imperative the investor understands the role of the adviser and provides full disclosure of their current financial situation and future goals. The advisor must have the relevant strategic and tactical skills to guide clients through change and big life decisions, have knowledge of legislative and tax implications but also recommend third party assistance where necessary. It is the collaborative effort of both the adviser and the investor to which a successful financial plan contributes.

The role of a financial planner is to help an investor recognise what they are capable of achieving financially. Implementing the plan is a lifelong process that will need to be revaluated through the life cycles and altered accordingly.  If an investor is under the impression a one-time meeting will give them the magical formula to boost their savings and investment returns they will be disappointed or risk being deceived into unethical ‘get rich quick’ investment practises. Trust is the pillar of the adviser / client relationship, hindrances may arise if clients are not forthcoming with details of current or past financial situations. Equally, clients must divulge personal information of future objectives regarding family and estate planning. This disclosure is necessary to form the foundation of an efficacious retirement savings plan.

A financial planner can offer many services; they must be conversant in taxation implications, legislative changes, superannuation, estate planning, insurance, investments and investment products. Continued education is the key as it is essential the adviser’s knowledge be current in these areas. However, other professionals such as accountants and solicitors must be called upon particularly in areas of taxation and estate planning. Limitations to the adviser’s ability occur when education is not up-to-date or was not sufficient to begin with. Lack of regulation has led to much distrust of the profession, especially since the Global Financial Crisis and scandals such as Storm Financial and the Commonwealth Bank. Nevertheless, by adhering to the ‘know your client, know your product’ obligations, an adviser can successfully assist a client in maximising their retirement savings.