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5 Things You Need to Know About Financial Planning, Including Costs

March 16, 2021
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need to know about financial planning

What do I need to know about financial planning

Everyone can benefit from seeking the advice of a financial planner at some point, regardless of their financial goals, current financial position or income. When it comes to your finances, being proactive and planning is the best step you can take to ensure a stable and comfortable future. In this article, we take you through five things you need to know about financial planning.

What is financial planning?

We’ve all heard the term ‘financial planning’ but what does it mean and what does a financial planner do? Well, that’s a great question! While many perceive a financial planner as a service accessed by the wealthy, that’s not necessarily the case. Anyone can benefit from seeking support from a financial planner regardless of their stage in life.

Put simply, a financial planner will tailor solutions to match your financial and lifestyle goals. Once a financial planner understands your objectives, they can provide strategic advice that can include:

  • Superannuation and investment advice
  • Risk insurance
  • Cashflow planning and budgeting
  • Structuring your bank accounts
  • Tax planning
  • Retirement planning

For more information on how a financial planner can help you, click here: Financial Planning; what, why, how?

How to choose the right financial planner

The right type of advice is priceless, and a good planner will take the time to get to know you and understand your financial goals and how you can best achieve them.

When it comes to choosing a planner, make sure they have an Australian Financial Services License (AFSL) or they are an authorised representative. It’s also worth meeting them face to face or, at the very least, over an online meeting so you can clarify if they are a good fit. In most instances, financial planners typically provide a no-obligation initial consultation.

Associated cost may also be a deciding factor. We address costs in detail further down.

According to a 2019 ASIC report, although 41 per cent of Australians intend to get personal financial advice in the future, many of them will not proceed because of perceived barriers like high costs or a significant distrust of the industry. This is why it’s essential to choose a planner you’re comfortable with, who has a good reputation and is transparent about the costs involved.

Where possible, we would also recommend seeking impartial advice from a planner who doesn’t have any affiliations or commission-based relationships.

For more information on how to choose a financial planner, visit our blog:

Choosing a Financial Advisor: What You Need to Know

The benefits of seeking financial advice early

Financial planning is for everyone, not just for the financially savvy or wealthy. In reality, the sooner you seek financial advice and start planning for the future the better chance you have to achieve your financial goals.

Whether you’re planning to travel, buy a home, start a family, reduce debt or retire; a plan is required. These are all big life milestones that require careful planning to ensure you’re able to enjoy these moments instead of stressing about money. Seeking financial advice early will set you up for these milestones.

Additionally, financial planning can ensure you’re in a comfortable position to protect your family. Unfortunately, the unexpected can happen at any time and if you were permanently or even temporarily disabled through injury or illness, you would want to know your family could maintain their financial obligations. This is where risk insurance comes in. Financial planners aren’t all about budgeting and saving; they’re also about planning for all situations to ensure both you and your loved ones are in a position to manage whatever comes your way. The earlier you’re able to consider risk insurance, the more prepared you will be in the long-term.

Learn more; Financial Planning for Low Income Earners – No, It’s Not a Myth.

The costs of seeking financial advice

Costs associated with seeking financial advice, and how planners are compensated, can vary from planner to planner. Commonly, planners charge an annual retainer plus a percentage of invested assets.

People often want to know whether financial planning fees are tax-deductible within Australia. Typically, if the advice you are seeking relates to investment advice that leads to or is directly associated with a specific investment that produces assessable income, you should be able to claim these fees. Advice relating to the following is typically not tax-deductible as it has not yet contributed to your assessable income.

  • General financial advice
  • Financial plan preparation
  • Initial investment advice
  • Upfront fees
  • Advice regarding non-assessable pension income

The costs of seeing a professional service in any industry can be prohibitive. However, seeking the services of a financial planner may not be as expensive as you may think. In the long term, a financial planner will not only help you save money but also assist you with wealth accumulation.

So, why should I use a financial planner? 

According to the Productivity Commission, almost half of Aussie adults have a need for financial advice that’s been unmet. That’s a big number!

If you’re in doubt about engaging a financial planner and think you can manage your finances on your own, remember financial planning is about so much more than managing your investments and savings. Saving money and reaching financial independence isn’t as simple as putting money in a separate bank account and not touching it. If it was, we would all be doing it! Setting clear financial goals aligned with your overall future goals, with the support of an experienced financial planner, will help you make those goals a reality.

Where else do I need to know about financial planning?

It’s very important to note that not all financial planners are the same. We highly recommend speaking with a variety of recommended financial planners before deciding on the one that’s right for you. If you would like to speak with an Inovayt financial advisor, you can book a free, no-obligation meeting here.

Is a financial planner right for you?


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