Many individuals are not adequately prepared for retirement and may find it challenging to navigate the complex financial decisions involved in planning for this phase of life. This is the situation most financial advisers are passionate about avoiding, and where their expertise can be the key to a smooth transition to what can be a wonderful phase of life – done properly! For those new to the ‘retirement’ conversation, we’re going to explore the benefits of having a financial adviser to help you retire well.
So, what are the true benefits?
Establishing your goals
A financial adviser can help you identify your retirement goals and objectives, and keep your eye on the prize along the way! They will assist you in setting realistic financial targets based on your current financial situation and your retirement needs. This will help ensure that you save/create enough to meet your financial needs during your retirement years.
Investment management
One of the key roles of a financial adviser is to help you manage your investments. They will work with you to create an investment plan that aligns with your retirement goals, risk tolerance and timelines. This can help ensure your investments are diversified, and you are not over-exposed to any one asset class or investment.
Tax planning
Part of retirement planning is considering a tax strategy. A financial adviser can help you reduce your tax burden by identifying tax-efficient approaches and recommending tax-saving opportunities. They can also help you navigate complex tax rules ensuring that you do not pay more in tax than necessary.
Retirement income planning
A financial adviser can help you develop a retirement income plan that will help you achieve your retirement goals. They will work with you to identify sources of retirement income, such as pensions, superannuation and any other investments. They can also help you determine when to start utilising your superannuation balance and ideal strategies for maximising your benefits.
Risk management
As you approach retirement, it becomes more critical to protect your assets – losses at this point in life can have far more dramatic ramifications with little time to recover! A financial adviser can help you manage the risks associated with retirement such as market volatility, inflation and longevity risk. They can also help you develop a contingency plan in case of unexpected events such as a health crisis or disability.
Estate planning
A financial adviser can help you develop an estate plan that will help ensure your assets are distributed according to your wishes. They can also help you minimise fees and costs associated with estate planning, as well as strategies to most effectively distribute your wealth to future generations.
Problems can arise when a financial adviser isn’t utilised (and yes, we’ve seen it all!)…
Inadequate retirement funds
Kicking it off with the obvious, without the guidance of a professional individuals run the risk of having inadequate money for the retirement they desire. This unfortunately occurs far too often, when people fail to properly plan for the future, start contributing to alternative investments too late or invest in inappropriate products.
Inefficient asset allocation
Investing in the wrong assets, or lack of diversification can lead to unfortunate losses an reduce the amount of money available for your retirement.
Poor retirement income planning
Without a comprehensive retirement income plan with thorough foresight and strategy, individuals may not have enough money to enjoy the standard of retirement they had envisioned, or even worse – to cover living expenses!
Failure to adequately manage risk
A lack of risk management in your strategy can expose you to financial risks that can have damaging effects on the retirement pool, such as market volatility. It really helps to have someone ‘in the know’ on your team!
Lack of knowledge and expertise
Australian advisers chose to spend their best years acquiring the tertiary education needed (an approved bachelor’s degree or above or equivalent – ASIC) to support us ‘mere civilians’ through all possible situations. Retirement planning in particular involves complex financial decisions and regulations that can be difficult to navigate without expertise, often leading to poor decision-making and missed opportunities.
Emotional decision making
Individuals can make irrational financial decisions based on emotions, anxiety or FOMO (fear of missing out) rather than rational analysis and objective advice.
Becoming a victim of fraud or scams
Financial scams and fraud are absolutely rampant in Australia (you will know if you’ve stayed up-to-date with our blogs on the topic), and can lead to significant and heartbreaking financial losses, especially for individuals who lack knowledge, exposure to information like scam alerts, and expertise in financial matters.
Missed opportunities
Without a financial adviser, you may miss out on investment opportunities, cost-reducing strategies, and other innovative benefits emerging within the industry that can enhance your retirement income pool.
Lastly, but most importantly (in our opinion), why are retirees with a financial adviser HAPPIER?
They have greater peace of mind
Working with an adviser can provide peace of mind by helping you to feel confident about your financial position. A financial adviser can help you develop a comprehensive plan that takes into account goals, risk, and your unique needs. This reduces stress and uncertainty, which is often not the experience of those managing finances alone.
Superior investment performance and reduced risk = stress free retirement
A financial adviser can help retirees make more informed decisions, which can lead to better investment performance. Advisers have exposure and expertise in investment analysis and can help you build an optimally diversified portfolio that is aligned with your risk tolerance and future goals. Less worry on your shoulders = a more enjoyable retirement phase!
More income to live your dream retirement
A financial adviser can help retirees to develop a retirement income plan that supports income and optimises all income streams to ensure the maximum retirement pool is available to fund your ideal retirement lifestyle.
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