Nick Stewart says getting good advice is priceless.
Nick Stewart says getting good advice is priceless.
OPINION
If you wanted to build a home to shelter you and your family in the future, you would consult experts and skilled, certified professionals to get the job done.
You would avoid the cowboys (the ones promising too much for too little and the ones without proper industry-specific credentials)because you know that if the proverbial hit the fan, they would be the first ones to disappear or deny accountability.
You would also likely shop around to find someone who can really help you achieve your vision, within your timeframe and budget.
Getting your financial house in order requires the same level of consideration and careful planning.
You can start with the foundations; your long-term goals like retirement. These might take a while to firm up, but once they’re set, you will have a strong base to build upon.
Next – the structure. What do you want your house to be made up of? How much risk are you comfortable taking on? A good financial adviser, much like a good builder, will take you through the pros and cons of each option and determine which will support your journey best.
Nick Stewart.
Then there is cladding to consider. To weather life’s storms, it’s a good idea to shore up your insurance against things like loss of income, health issues, or other unforeseen circumstances which could see you either paying through the nose or losing your ability to earn and provide for your family.
Even if you have the cash up front to cover an event, you could face a serious setback while your hard-earned money (or your family’s money, as may happen in the case of a loved one becoming ill or passing away) goes to keeping you afloat during a turbulent time.
Beyond that – that’s the window dressing, the furniture. The specific add-ins and allowances that will make your future more comfortable and enjoyable. Will you need to update your car at some point? Are you planning to travel in retirement? Will you be living in a city, or in a regional town? Will you have paid off your mortgage and other debts by the time you stop working?
Much like a physical home, your financial plan should be purpose-built to meet your needs. And as much as we Kiwis love a DIY, it’s best not to go it alone if you want professional results.
The value of good financial advice goes beyond returns. Every client is unique, with their own goals and outlook on life. Think of it like a kit-set home versus one designed by an architect with your best interests in mind; they both put a roof over your head, but one will be much better crafted and suited to your individual purposes.
In saying that – there is evidence that the value of advice positively impacts returns. Data from Vanguard places potential added value (basis points) up to 3 per cent per annum or more, while another study from Russell Investments placed added value at up to 5 per cent per annum or more.
There are logistics in the value of good, holistic advisory services; for example, less exposure to unnecessary risk as your adviser will know when to rebalance and why. Then there are less easily quantifiable benefits like peace of mind, expertise, and advocacy.
From my own experience as an investment fiduciary, I can say that the clients who are our biggest advocates are the ones who have been with us a long time – long enough to see that time in markets is more valuable than timing the market, and that holding to a plan in tough times can lead to better outcomes than locking in losses in a downturn.
There is also a certain safety in going local and using someone who has skin in the game. As with any service ... people talk. If someone has done the dirty, you’ll likely hear about it. The reverse is also true, but make sure you’re not falling for any outlandish claims on potential returns. If you are looking to have a chat with a fiduciary, try to meet face to face – and get everything in writing, so you know you’re covered.
Much like your dream house, your financial map should be created with your best interests in mind. Finding a trusted fiduciary to take the journey with you is a great way to start building your financial future.
· Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke’s Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 319.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
