02 Oct Financial Planners Are Expensive – Or Are They?
There is always someone who can do it cheaper. But, doesn’t that mean they will do it better?
If I had a dollar for everyone, who told me I am too expensive I would be a millionaire (and probably a retired one at that).
Financial planners can be expensive. There is no point spending $5,500 for a financial plan if you are on Newstart.
But there are a lot of people who need to focus on the benefits, rather than the cost, of professional advice and expertise. It is amazing how some people expect everything to be done for them for free!
I always like sharing this story about a Kiwi Nurse who arrived in Australia a couple of years ago.
She was very unfamiliar with how the Australian tax system worked, she told me that she hadn’t done her tax return for the previous financial year.
I was completely shocked! I knew she had only come in January and she would have got back all of the tax that was deducted from her pay. My rough estimates felt it would be around $2,000.
She seemed interested and agreed to see an accountant.
“So they will do this for free?”
“No, they will probably charge you $100.”
“ONE HUNDRED DOLLARS!?! FLIP THERE IS NO WAY I AM PAYING FOR THAT!”
“So you don’t want to pay $100 to get $2,000 back.”
This type of conversation gets repeated to me over and over again.
People think they are smart by cutting out the middleman and doing it themselves. But, more often than not they come out much worse.
Have you ever seen a botched home reno?
Someone thought they could build their kitchen themselves but ended up completely screwing it up. Then they have to pay someone, even more, to fix it up.
Here’s a thought. Do rich people get advice or do it themselves?
I would dare say in the significant majority of cases they will get advice from people who are smarter than them in a particular field.
Not only does this mean they get the best results, but they also free up time doing what they love and what got them the wealth in the first place.
Steve Jobs, the founder of Apple, put it best when he said: “It doesn’t make sense to hire smart people and tell them what to do, we hire smart people so they can tell us what to do.”
Poor people focus on cost; wealthy people focus on value.
So my question to you is if rich people are paying a significant amount of money for advice, why aren’t you?
Again, on the flip side, some people charge exorbitant amounts of money for not much. If you go back ten years in financial planning, it was common practice to see fees as high as $20,000 per annum for basic investment advice!
No wonder financial planning had a royal commission!
Thankfully with competition, the cost has gone down significantly, but also the benefits have increased at the same time as well.
A financial planner is legally required to act in your best interest and not flogging you a product which only serves their back pocket.
But it is not just about information. If the information is all that we needed, we would all be billionaires with six-pack abs.
We need experts who can put a plan into action.
Think about it, how hard is it to lose weight?
It seems simple, eat less and run more. Isn’t it?
But we all know it is much more complicated than that. It is also why there are so many personal trainers who are helping people lose weight and reach their fitness goals.
More often than not, you will achieve much more with a personal trainer than if you do it yourself.
Your finances are the same as well.
You can try to Master Your Money yourself. And if you are in the 5% of Australians who are disciplined enough to do it, I congratulate you for it.
But if you are in the 95% who needs a helping hand, please take the first step and ask.
Don’t be like that Kiwi Nurse.
I shouldn’t be too harsh on her though; she did agree to marry me…
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