Seven Things a Financial Planner Can Help You With

Whether you've just been married and are interested in purchasing a home, or settled and concerned about university tuition for your children or impending retirement, a financial planner can help you. In addition to the usual retirement superannuation, a financial planner can assist you with forming a plan to invest, plan for future taxes, and plan for long term financial security.

What is a financial planner?

Unlike a stock broker, who directly invests your money in the stock market, a financial planner devises a plan to help you save money for now and later in life. Their company offers funds and plans to invest your money in, and they charge either a flat rate fee or a percentage to sell you different investment plans.

A good financial planner belongs to the Financial Planning Association of Australia (www.fpa.asn.au) and is fair and upfront about fees, easily accessible and answers your questions. You can usually find a good financial planner by asking friends, family or co-workers, or checking out the FPA website. So, once you locate a financial planner, what can he or she assist you with?

1) Help You Understand Risk.

Your financial planner will carefully consider your debt, assets and income to assess where you stand and develop a sound financial plan for your requirements. However, you also need to think about the level of risk you want to take and to set aside funds appropriately.

If you want to acquire wealth rapidly you're going to need to take serious risk in losing money and investments due to the type of business. Some plans are very low risk when it comes to your losses but they also gain less worth and gain at a slower pace.

A good financial plan will have a balance of risk levels, with some funds in high risk areas such as investing in shares or property and funds in lower risk investments such as a capital gain life insurance policy.

Your financial advisor can also assist you with devising a strategy to alter your risk levels over time so that you're putting more of your money into more secure investments as you acquire wealth.

2) Assess Your Insurance Needs.

A financial planner can be an important key to helping you to assess your insurance needs. No matter how old you are, it's essential to ensure that the ones you love are taken care of in the event of your death or injury. This means making sure you have adequate insurance to cover your needs, such as paying off your mortgage, paying the everyday bills and educating your children, if you have them.

There are many different types of insurance you can purchase, such as total life coverage, disability, trauma and salary continuance. A meeting with a financial planner will help you to assess your debt, your needs and your risk to find an insurance plan that's perfect for you and your loved ones.

3) Avoid Over-Taxation.

If you're dealing with trying to manage superannuation funds, investments, and all of the financial planning factors on your own, you might be taking a hit in the taxation department.

The government has set up a lot of laws to help Australians save through superannuation funds that give tax breaks. However, a good financial plan will have a diverse mixture of investments that expands above and beyond superannuation only.

Your financial planner can help you assess the amount of taxes you'll need to pay and help you to develop the best plan to keep taxes low so the money can stay in your pocket.

4) Retirement Planning.

Waiting until you're ready to retire to take retirement planning into hand is by far the worst thing you can do. The upcoming retirement of the Australian Baby Boomers will double the amount of retired citizens over 65 years.

As Australians are living longer due to good nutrition and better healthcare, this means there will be less in the Age Pension fund to help out in your retirement years.

A financial planner can help you plan for your retirement by helping you to choose a good mixture of superannuation fund, investments outside of super that you can access in the event of emergency, and help you manage the level of insurance you need to cover your loved ones' cost of living in the event of your passing.

5) Solving the Myth of Superannuation.

A financial planner can help you understand which superannuation funds work best for you. Understanding the ins and outs of superannuation, or super can be confusing on your own.

You may believe you don't need more than the 9% saved through your employer to help ease the burden of retirement. If you're thinking it's plenty of money to retire on, you're incorrect. The FPA estimated that a person retiring in 2003 would have a measly $100 a week, tops (based on a person surviving 15 years after retirement).

6) Borrow to Invest?

This may seem like a strange concept, but a financial planner may be able to help you decide if it's in your best interest to borrow money to help you make better investments. Some people want to create wealth quickly, and borrowing money will give you more funds to allocate towards investment.

A financial planner can assist you with assessing your financial position to get an idea of the level of risk involved. If you decide to borrow, you'd still be assuming risk, but with the help of a planner it would be less than if you decided to borrow on your own.

7) Assess Inflation.

If you look at your portfolio, you might think you have a good amount of capital growing - until you take into consideration the rate of inflation.

A good financial planner will be able to help you assess inflation to help you keep your capital growing over the years. You want to make sure your after-tax return is greater than the rate of inflation so the value of your money doesn't decline. You also want to make sure you have some capital growth over the years, and a financial planner is someone who can help ensure this.

In Conclusion.

There are quite a few things a financial planner can assist you with to get your finances in order. From retirement planning to assessing the inflation rates to your portfolio, a good financial planner is able to channel funds into different risked funds and plans to create a secure future for you and your loved ones.