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Does your financial planner have a university diploma? They’ll soon need one to handle your retirement nest egg

The financial advice industry in Australia is about to undergo massive upheaval just as many baby boomers and older Australians are going to be needing some decent advice.

We’ll be searching for financial planners in an industry likely to be enduring a mass exit of experienced advisers.

It will be a seller’s market for people offering financial planning services next decade. And in a seller’s market, buyers have to be particularly careful.

With as few as 35 per cent of financial planners believed to have a university degree, many will decide it is just plain too hard to complete the necessary qualifications to stay in the game beyond January 2024.

There will be a shortage of advisers around early next decade if the Financial Adviser Standards and Ethics Authority buggers up the implementation of new laws requiring all financial planners to have the equivalent of a university degree by 2024.

Those of us who don’t already have a trusted financial planner who we know is going to stay in the game will have to start hunting for a new adviser.

In this world you’re going to be better off being as capable as possible spotting a bulldust artist and a barely disguised product flogger.

It will be more important than every to have some basic knowledge to understand what you’re being told and to make the most of finding a good adviser.

The revised and updated version of Don’t Panic shows you how to do more with less in your nest egg.The revised and updated version of Don’t Panic shows you how to do more with less in your nest egg.
Camera IconThe revised and updated version of Don’t Panic shows you how to do more with less in your nest egg.

Rather than despite, it is because of lessons learnt in a post-graduate insurance unit that I am turning right now to a trusted financial planner to fix the structure of my life insurance policies.

Yet I’ve worked out for myself the asset mix in my work super fund that I believe suits my complex financial situation.

I don’t need an expert to tell me I need to spend less and do more to pay my mortgage off faster, but some tips on budgeting have been handy because I share humanity’s limited capacity for self-reflection on habitual behaviour.

Reading insights from the likes of Nick Bruining and other specialists helps keep me up with the financial issues that I need to consider for myself and my family and other people who I care deeply about.

Seeking advice and constantly building financial understanding are complementary concepts. And as we get closer to retirement, that understanding becomes increasingly crucial.

Even those who haven’t ever had a financial adviser may well need help over the next decade sorting out super, retirement income or funding and finding nursing home places for ourselves, our partners or parents.

If you’re lucky enough to have parents who are still alive, chances are they will get to an age where they’re going to need an increasing amount of assistance either staying independent for as long as possible and dealing with life’s inevitable decline.

The job of supporting parents will increasingly involve understanding the complex world of account-based pensions, home care and the nightmare of complexity around Commonwealth funding of residential aged care.

No longer will our income earning capacity, parental support from hard-working parents raised in the shadows of two world wars and optimism about our future be enough to get we baby boomers through.

An increasing number of families are dealing with the overlapping superannuation, taxation and means-tested age pension and nursing home care funding systems.

And couples face the financial and emotionally complex issue of one staying in their home while a beloved is in need of nursing care.

It will be more important than every to have some basic knowledge to understand what you’re being told and to make the most of finding a good adviser.

You can add to that the financial challenges many of us will face preparing for our final years in the full-time workforce and hopefully for a long full or partial retirement.

Arguably the simplest thing in all this is adjusting the asset mix in your superannuation to better reflect your time of life, what you hope to do with your super savings and your own appetite for investment risk.

For those of us still in the workforce, the more complicated stuff might involve issues like do you start a transition-to-retirement super arrangement to reduce your over-sized mortgage?

Do you maximise mortgage payments or top-up your super as much as possible with pre-tax dollars?

And do you need all that life insurance now the kids have finished university? Or more importantly, is that insurance set up by the friendly planner at the local outfit skimming commissions for which you are getting no service.

These are all issues many people in their 50s have to confront, as do others in their 60s and even 40s. They are sometimes extremely complex but can be made easier by getting some good advice.

So far, there is confusion about what courses will have to be done by existing planners and many seem to be examining how to cash in their chips.

This will mean that the planners left and new entrants may well have less time available to do the comprehensive advice that so often has marked the industry for better and for worse.

There will have new players, new rules and a new environment.

Anyone entering such an environment should be as informed as possible about what you know and what you don’t know.

QUESTION TIME: WHAT YOU SHOULD ASK YOUR PLANNER

What are your qualifications? How long did it take you to get them

The adviser should tell you about what they’ve studied and the length of any courses. MoneySmart says a diploma, advanced diploma or degree qualification in finance, economics, accounting or financial planning is desirable. New rules will require planners to have the equivalent of a degree.

Are you authorised to provide advice on the products you are recommending?

The last thing you want is someone to advise you on matters on which they aren’t qualified. Check the MoneySmart financial adviser register to see what products and issues an adviser is legally allowed to help you with.

Can you advise on my current products?

Some advisers have highly limited product lists, which may result in them being unable to help you with your current life insurance or super fund. The nightmare scenario is an adviser who moves you from a perfectly good fund or policy just to snare you as a client.

What is your experience?

Ask the adviser about their typical clients. This will help you judge whether they have the experience to deal with people with similar issues and goals as you.

Source: MoneySmart

Learn how to make your nest egg work harder for you

Three years after his first book ran off shelves as readers were drawn to his no-nonsense brand of advice, Nick Bruining’s fully revised and updated edition of Don’t Panic: More reasons you don’t need $1 million to retire well is now on sale at leading book stores and newsagents for $29.95.

What you will learn from Nick’s new book:

  • How a couple with $270,000 in super and savings can retire on $48,000 a year — tax free
  • How to make sense of your super statement and know you aren’t getting ripped off
  • Nine ways to boost your super
  • How a couple can earn $92,000 a year and still get some of the age pension
  • How to choose a good financial planner and what you should pay

To order Don’t Panic, click here.

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