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What’s the value of good advice?

I recently went to a financial planner who wanted to charge me $3500 for a plan and ongoing service fee of the same amount. Is this what financial planners generally charge? It seems pretty expensive. I am married, in my mid-40s and my kids have finished school and we have combined super of about $450,000 and we have $100,000 to pay off our mortgage on a home worth $550,000. We want to retire with over a million dollars in super and maybe an investment property.

Let’s deal with the price point first. The figure isn’t high and many financial advisers will charge one per cent of the funds invested. If you have $500,000 to invest, then your fee would be $5000 but if you have $1 million to invest then you could be charged $10,000.

There are some planners like my business, where they will give you a flat dollar amount based on how complex your life is and how much time is involved to do your plan. Some planners will make the Statement of Advice (SOA) cheap, such as $1000, as this isn’t tax deductible, but they then might charge $4000 for ongoing service, which is tax deductible.

I believe if you need advice to reach your goals because you’re too busy or don’t have the skill nor patience to do all of the work needed, then you should search hard for a trustworthy and very competent planner. And if the advice saves you money because they know rules and tax laws that you don’t and they know investment products or strategies that are both high returning as well as tax-effective, then paying $3500 for that would be cheap.

If someone wants to simply own his or her house and retire onto his or her super, then less advice is needed. Here the cost of advice should be small but even paying for advice on whether you should pay off your house or salary sacrifice into your super fund could be a really smart move.

My advice always is to write down your goals. Then rank out of 10 how important are these goals. If you rank them 7 out of 10 or higher and you know you don’t have the time or knowledge to make them happen, then you would be mad not to look high and low for a good financial adviser.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Saturday, April 02, 2011

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