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The Perfect Time to Talk to a Financial Adviser

, Written By Scott Alman

Seeing a financial adviser could change your life. But when is the right time to make that call? The sooner the better, says Scott Alman, managing director of Consilium.

Seeking financial advice is not just the domain of wealthy individuals. Planning for financial security is crucial at all stages of life, across each generation. So why is there not a higher percentage of people who seek independent financial advice? Advisers we have spoken with say that often people often fall into one of the following categories; ego, ignorance or overwhelmed.

We are bombarded by financial commentators who indicate we should know when and where to invest. But like our favourite sporting stars, the best strategy is to check our ego at the door and seek out expertise you can trust. Even Tiger Woods has a coach.

According to the Commission for Financial Capability, 68 per cent of New Zealanders have money worries and are overwhelmed by the volume of choice. A prudent investor understands the benefits of seeking advice and often views their financial adviser like their CFO; someone who will take them through the nuances of investments and set them up to meet their financial objectives at each stage of their life.

The advantage of starting early

The most powerful financial force in the world is time – it tends to grow your income, reduces your debt and compound all your gains. Wealth doesn’t grow in a straight line; it often grows rather slowly in the first decades of our adult lives.

Estate planning, insurance, KiwiSaver and student loans all require consideration at this stage. Building up a strong relationship with a financial adviser means they have a thorough understanding of your goals, priorities and circumstances, and can get you on track to grow your investments and savings.

Balancing responsibilities, lifestyle and investment

In our 30’s and 40’s our careers are advancing and our earning potential is rising. We also tend to be raising our children and buying homes. It’s a time of life when talking to a financial adviser should be on your list of priorities.

An independent adviser can help you navigate through this stage by balancing out your debts, investments and lifestyle, and work toward a secure financial future.

At any stage throughout our lives, significant life events such as a relationship breakdown or illness can have high financial costs and may be a trigger for a new investment strategy.

It’s never too late to make a difference.

As we move into our fifties and sixties, wealth tends to grow exponentially, creating significant gains. Major liquidity events tend to take place during these years such as selling a business or rationalising property investments. Also, more wealth is being transferred between generations and receiving an inheritance could change your financial trajectory.

It’s often at this stage that people come to the realisation that they really need to get an objective perspective. Your financial adviser can show you how to distribute your spending to match your time of life, and draw-down enough funds to optimise your life choices and goals.

When financial advice is vital:

·         Shrewd first investors
Your first investment will probably have been KiwiSaver but the right financial adviser can prevent you from taking on too much risk, show you how to protect yourself and explain what types of investments might be best suited to your situation.

 

·         Liquidity events
A lump sum, such as an inheritance, selling a business or realising a property gain, can have an enormous impact on your future wealth as it compounds over the years. Getting financial advice will help you resist the temptation to spend too much and help establish an investment strategy.

 

·         Retirement
Although many people are working longer, we are also living much longer. In fact, our length of time in retirement may be three times that of the last generation. With this comes a need for an initial plan and an ongoing relationship with an adviser to match your money with your life goals.