Not having an adviser is a risk

Many people assume they can manage their finances without professional help and in some cases, that might work. But according to behavioural finance expert PHILIP COURTENAY, going it alone often leads to less confidence, less clarity, and poorer long-term outcomes.

A good adviser offers more than technical guidance. They also provide reassurance, structure, and support. Even people who claim to “manage their own money” are often doing very little  and while there’s nothing wrong with keeping things simple, avoiding decisions altogether can be far riskier than taking modest, well-informed steps.

For those who are open to working with an adviser, trust and credentials are crucial. With so much unregulated content online, especially on social platforms, choosing a qualified professional who takes time to understand your values can make all the difference.

Key takeaways

People who don’t work with an adviser often feel less financially secure and more anxious about the future, even if they technically have the means to succeed.

Managing your own money isn’t wrong, but it’s often misunderstood. Many people simply avoid decisions or keep money in cash without a plan.

The most important qualities in a financial adviser are trust and proper credentials. When those are in place, the advice relationship can be hugely valuable.

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Transcript

Robin Powell: Life expectancy has increased dramatically over the last 50 years. Retirement can now last several decades. And yet many people almost drift into it. Justin King is a retirement planner, podcaster and author.

Justin King: We drift into being a little overweight, we drift into not being so fit as we want to be. Sometimes our relationships can drift. Life is a bit like that and, of course, this retirement phase… you know, if you arrive at your retirement date – whatever date that is that you choose – and you just go, “Right, I’m ready for this. I planned for this. I know what to expect. I know what I’m going to do. I just can’t wait for this period of my life.”

RP: Working out when to retire isn’t necessarily easy. Some people choose to retire and never work again. Others work part-time and wind down gently. Either way, Justin says, it’s vital to have a sense of purpose.

JK: To have purpose any time in your life is hugely important. Possibly though, of course, we have a wonderful opportunity to be really purposeful about this stage of life because we are no longer shackled to a job that, possibly, didn’t really stimulate us or fulfil us. It may have been that that is the case, but it may not have been. There’s an awful lot of people you can talk to who are dreading Monday morning and, if that is the case, I want you to then go, “let’s make sure this period of life is wonderful for you,” and that’s going to take some planning. And also have a conversation about: what would be really fulfilling? Because that’s what you really want in life: you want to be fulfilled!

RP: For most people, the key question is this: how much money do you need to enjoy the lifestyle you want in retirement? But it’s not a simple calculation.

JK: We only know history. We don’t know the future. We don’t know what interest rates are going to be, we don’t know what inflation is going to be, we don’t know what investment returns are going to be. We know so little, it’s quite amazing that we can call ourselves retirement planners, with all honesty! We don’t know how long someone’s going to live. So we’ve got all these vagaries to deal with. What we can control, of course, is how we live our lives – what we’re spending – and also possibly be really conservative with our approach of what our expectations are likely to be, what our investment returns are likely to be, to be quite negative or pessimistic about inflation. You know, you put it all in a spreadsheet for 30 years and, as an ex-pilot and an ex-sailor, you get your course wrong by one degree and you end up in totally the wrong place if you keep on that course for a long period of time!

RP: It’s precisely because retirement planning is so complex that it’s crucially important to seek professional advice — and preferably ongoing advice. Our needs and circumstances can change quite quickly in later life. Having a planner we can turn to when they do is extremely valuable.