The Future of Financial Advice (FOFA)?

Before you seek any paid financial advice, we suggest you educate yourself and improve your own financial literacy first as much as possible.

We also suggest you develop some insight and understanding into your own Investment Risk Tolerance and Investment Personality.

This will mean that if/when you do see a financial planner, you are less likely to be taken for a ride and pushed into investments that don’t really suit you, your needs or circumstances.

You will also be able to ask the right questions and judge for yourself whether what the financial planner is suggesting to you is really right for you.

Always remember, no-one cares about your money more than you do!

You are the only one who will really knows whether a particular strategy or investment is suitable for you.

You can’t delegate this decision to anyone else!

The more financially literate you are, the easier it will be for you to see through any biases in the advice that is given to you.

Most financial planners are not really completely independent and unbiased, even the one’s who don’t accept commissions and are “fee-for-service”, as often these providers are “vertically-integrated” and earn additional income by providing other services such as doing your taxes, mortgage broking or being buyers agents.

These additional revenue streams will inevitably lead to a bias in the way they present their advice to you.

There are very few truly independent financial planners in Australia who focus purely on giving people good strategic financial and investment advice, without looking to make an extra dollar out of that advice by doing your tax returns, offering you a loan or helping you buy a property.

Unfortunately the catch here also is that those advisors who do try and do this often don’t really have the breadth and depth of knowledge to give the most integrated and comprehensive advice!

Therefore, the more financially literate you are, the easier it will be for you to make more independent, unbiased and informed decisions that fit with your own circumstances and financial position.

In our view the “Future of Financial Advice (FOFA)” should really be about the “Future of Financial Education” (FOFE).

That is, more educated, informed and financially literate investors who can think for themselves and look after their own financial well-being, and develop their own unique financial plans and strategies, without having their hands held by financial planners with their own inherent biases and motives.

That doesn’t mean you shouldn’t use financial planners at all, but when you do use them you will be able to apply their advice more effectively to your own situation.

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