Updated: 29th January 2025 | Garry Crole
Why You Need a Financial Adviser – Especially Now
Did you know that only 15% of Australians have a financial adviser? It’s no secret that many Australians, especially those approaching retirement, feel uncertain about their financial future. However, the core market for financial advice is rapidly expanding, with a growing number of individuals aged between 45 and 55 seeking professional guidance. The closer we get to retirement, the more pressing the need for a well-thought-out plan becomes.
For those who don’t yet have an adviser, here are 20 key considerations that underscore why engaging with a financial planner is essential:
For many, writing a Will might seem like something to do later, but the reality is that it’s essential to ensure your loved ones are protected. As advisers, it’s our responsibility to encourage clients to have their Will legally reviewed and updated by a professional, or, at the very least, refer them to trusted experts in the field. A comprehensive estate plan should be a key part of our ongoing service offering.
One of the most common pitfalls we see with unadvised clients is a lack of diversification. Many are still heavily invested in their super funds or a handful of stocks, which can expose them to significant risk. As advisers, we help clients understand the importance of diversification across various asset classes—such as property, international equities, and managed funds—to help secure a stable retirement income.
A major issue for the unadvised is thinking about money in today’s terms. Inflation can erode the purchasing power of your savings, and long-term planning must account for that. Our role is to show clients how to factor in inflation into their financial strategies to ensure their wealth retains its value over time.
Even in your 50s, there are still plenty of ways to maximise retirement savings. Superannuation is one of the best tax-effective structures available for saving for retirement, but many clients don’t realise the full extent of strategies available to them. By partnering with an adviser, you can make a meaningful difference to your retirement savings, even with limited time left.
As clients approach their 50s and 60s, health becomes a more pressing concern. While Medicare covers many health expenses, there may be significant out-of-pocket costs for aged care or long-term medical needs. Advisers can assist clients in planning for these potential costs, ensuring they aren’t blindsided by hefty premiums or additional medical expenses.
Many clients don’t realise how much they can contribute to their superannuation. Those nearing retirement should be looking to maximise their contributions, even just 1% more each year, which can significantly boost the final amount they have to live on during retirement. As advisers, we help clients understand the benefits of compound growth in super and tailor contribution strategies to their situation.
While brokerage accounts are popular, they are often not the most tax-efficient way to invest. An SMSF (Self-Managed Super Fund) or other tax-effective strategies can help reduce tax liabilities and increase returns. Advisers can offer guidance on how to best shelter wealth and grow it in a tax-efficient manner.
Many unadvised clients make the mistake of tapping into their super too soon, incurring taxes and penalties. We as advisers ensure that clients understand the rules surrounding super withdrawals and the impact it has on their future retirement income. It’s important to leave super untouched until the minimum retirement age, typically 60, to avoid unnecessary financial penalties.
A solid emergency fund is key at any stage of life, but particularly as you approach retirement. As advisers, we help our clients create a buffer for unexpected expenses, allowing them peace of mind knowing they are financially secure, even in challenging times.
Estate planning isn’t a one-off task; it’s something that needs to be reviewed regularly. Life changes—whether it’s a divorce, the birth of a grandchild, or the accumulation of assets—and your estate plan should reflect those changes. As advisers, we can play a crucial role in encouraging regular reviews of your clients’ estate plans.
Disability insurance is often overlooked, yet it’s a key part of protecting your future income. As clients get older, the likelihood of injury or health issues increases, and disability insurance can provide much-needed security. Advisers can help identify the right policies and ensure clients are covered.
As clients approach retirement, carrying high-interest debt can significantly hinder their financial progress. We guide clients in eliminating credit card balances, loans, and other debts before retirement, freeing up more income for savings and investment growth.
In your 50s, paying down existing debt should be a top priority. Whether it’s a mortgage or personal loans, clearing these debts will provide greater financial freedom in retirement. As advisers, we help clients develop strategies to manage and pay off debt systematically.
Retirement might feel far away for some, but the reality is, the earlier you start planning, the better. We help clients define their retirement goals and develop a clear strategy for reaching them, including understanding how much superannuation they will need to meet their needs.
It’s critical to understand what income you will have in retirement. This involves not only knowing what your super balance is but also considering any other assets or income sources, such as investments or the pension. Advisers can help clients model their expected income and ensure they’re on track to meet their retirement needs.
For those nearing retirement, focusing on capital preservation is key. The unadvised may be drawn to speculative or high-risk investments, but advisers help clients assess their risk tolerance and adjust their portfolio to protect their wealth in the lead-up to retirement.
Employer-matched contributions are essentially “free money” for your super. We strongly encourage clients to take full advantage of this benefit, especially as they near retirement. By making sure they are contributing the maximum amount allowed, we can significantly boost their retirement savings.
Good financial management requires discipline, and budgeting is the foundation. We help our clients create a realistic budget that ensures they’re living within their means and making the most of their income. Proper budgeting is essential for long-term financial security.
Retirement is a time to enjoy life, and travel is one of the most fulfilling ways to do so. As advisers, we encourage clients to set aside funds for travel in their retirement plans, allowing them to create memorable experiences in their later years.
If clients find themselves with more space than they need, downsizing could be a strategic move. It can release capital, reduce ongoing costs, and make retirement more financially comfortable. As advisers, we can help clients assess whether downsizing is the right choice and how to incorporate it into their retirement plan.
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