Money Makeover - Part 4
by Peter Switzer
Calling in the experts proves an investment, not an expense.
On the penultimate step of my money makeover, which has stretched over the 10 previous articles, I’ve tried to give you the solid foundations needed to turn your money life around.
Eliminate the chaos
Most of us live our money lives with varying degrees of chaos and the more you can minimise – or, hopefully, eliminate – this chaotic approach, the more likely it is that you will build wealth effectively.
Consider a financial planner
The point of this money makeover was to show that anyone, if they want to and have the time, can put together their own money plans.
And ‘plan’ is the key word.
You have to have a plan, and if you can’t or won’t do it yourself, then seriously consider a financial planner.
There are crooks
Yeah, I know that financial planners don’t have good enough reputations, especially in light of the Storm Financial failure and others such as Westpoint, where dumb or criminal advisers misled their clients so they could pocket big, hidden commissions.
But I believe the vast number of advisers are decent people, who want to do the right thing for their clients. That’s how we operate at Switzer Financial Services and that’s a fact.
There are problems
That said, the industry has had a problem with its pricing. Some advisers have taken commissions and other payments from financial institutions and haven’t been as transparent about what they do.
This can lead to product selection for clients that could mean the interests of the adviser came before the client’s.
Total transparency and nothing less
Others charge percentage-based fees and while this is okay if the dollars charged are clearly specified to a client, it can lead to overcharging. That’s why I say transparency about what the adviser receives and what the client actually pays is crucial.
Time is money
Because of excessive laws aimed at weeding out bad advisers, anywhere between 10 to 15 hours could be needed for a good plan. For more complicated situations, the hours could be longer and plans could be seen as expensive.
But there is a lot of work and responsibility with a financial plan. Plans generally should cost between $3000 and $5000 and they are not tax deductible (which is something the Federal Government should change – your first visit to an accountant is tax deductible).
Ongoing advice is tax deductible
Ongoing advice after a first plan is tax deductible and that’s why some advisers will undercharge on the initial plan to win over customers, who then sign up for ongoing service.
The importance of a plan
Some people need ongoing help while others don’t, but a first plan should be considered as it could answer key questions such as:
• Should I be saving more for retirement or could I have a better super strategy?
• Should I have investment properties?
• Am I working the tax system to my advantage?
• Should I pay off my house quickly or should I get into super salary sacrifice?
• How can I plan for my children’s education expenses?
• Can I use borrowing to quicken up my wealth building?
• How should I invest my money between all the competing assets available to build wealth?
Investing isn’t a punt
Often it is with this last function that advisers are often judged. They are seen as investment tipsters who can pick out the best funds, stocks, etc. Clearly, they do have insights working in the investment game, but there’s always a degree of punting when it comes to investment.
That’s why many advisers play it conservatively, relying on historically good performing funds.
But this approach doesn’t always work out, as the last market crash showed.
All the above are important
An adviser’s biggest gift to clients comes with answering the questions above. To secure great returns for 20 years but to be over-taxed because you don’t know the ins and outs of the tax system could cost you a packet!
Get help or change your habits
If you’re lucky enough to find an adviser who is well qualified and committed to honest service, the money-making experience should prove to be a great one for you and your adviser.
If you don’t go down this external help track, you can always do-it-yourself, but it will mean you changing you.
Stay focused to keep on track to financial freedom.
I have many favourite quotations that drive me daily and I share them regularly with my business and personal investment audiences. However, I have two I use the most to make people take on their biggest challenge to their success – themselves!
Make wealth a reality
This is the final and 12th step in your money makeover. The goal has been to help you change so you rid yourself of your money chaos, encourage you to establish your money goals and ultimately create the plan – either by you or by a professional – to make these goals or dreams come true.
Switzer shares his quotes
The two best quotes come from two very different people but they’re beauties to get you motivated.
Will yourself to win
Remember tennis great Chris Evert from Step Two?
To refresh your memory, she once was reported as saying: “Deep down, I wanted to win so badly, I could actually will it to happen. I think most of my career was based on desire.”
So, ask yourself these questions:
• Do you want to get wealthier?
• Do you want to be comfortable when you retire?
• Do you want to help your kids financially through life?
• Do you want to help others – friends, family or the needy?
The will to win
If you do, you have to want to build wealth – deep down.
You have to do a SWOT analysis – that is, look at your strengths, weaknesses, opportunities and threats – and see which of these will help or hinder in making your money dreams come true.
Evert tells us you have to want it so badly that you can make it happen.
Some people go to an adviser, who has the passion for his or her clients, and that can be an alternative way to building wealth, but we advisers do like our clients to be fully engaged in the process.
The next quote was given to me at a franchise conference in 1994 by a guy I barely knew, although he liked to fling around profound business quotations. I suspect this one came from US business thinker and speaker, Jim Rohn. It goes like this: “Work out what you want. Find out how much it costs. Pay the price!”
I’m not saying you have to pay the price to a financial planner – though given the fact I own a financial planning business, I’m not opposed to the idea – but I am saying you have to put the time into creating your money plan.
Pay the price!
The cost could be time but the returns can be sensational.
You might have to start reading finance and personal investment information every day on great websites such as www.switzer.com.au and (undoubtedly) there are others.
You need to watch great business television programs such as SWITZER on Sky News Business
Channel each week night at 7pm and then again at 10pm. (Apologies for this self-promotion but I am really proud of what we are doing in the money education and entertainment space right now.)
Watch the results
The change will see you regularly save, spend more wisely and invest sensibly as well as frequently.
Over time, you will get wealthier and you will understand that you don’t build wealth in a day but daily.
You will change from being chaotic to being planned with your money. You will be committed to a strategy based on knowledge of financial options, an understanding of how to invest long-term and to a plan that has been created for you and your goals.
Do you really want it?
The starting point goes back to Evert – do you really want to win deep down?
The next thing to do is to read these 12 articles again. It then would be time to do a SWOT.
Work out what needs to be done to you to change you for the better.
Just do it!
Next see what price needs to be paid to make it happen – time or money for expertise or education – then, pay the price!
Click here to view Money Makeover - Part 3. You can also download the full eBook on the link below.
12 STEP MONEY MAKEOVER: DOWNLOAD THE FULL eBOOK HERE
Published on: Thursday, February 07, 2013