Financial advice isn’t something you only need when you’re approaching retirement, have a large amount of money to invest, or something has gone wrong.
Some of the most valuable advice can happen much earlier, when something in your life changes.
A new job. A pay rise. Buying or selling property. Starting a business. Receiving an inheritance. Getting married or separating. Having children. Taking on debt. Changing your superannuation. Helping your adult children financially. Or simply changing your plans for the future.
These events can have financial consequences that extend well beyond the immediate decision.
That’s why one of the most important parts of having an ongoing relationship with a financial adviser is knowing when to pick up the phone and ask for advice.
You don’t necessarily need to know exactly what advice you need. Sometimes, you simply need to tell your adviser what has changed.
What is financial advice?
Financial advice is about much more than choosing investments.
Depending on your circumstances, financial advice may cover areas such as superannuation, retirement planning, investments, personal insurance, cash flow, debt, wealth accumulation, pensions and retirement income, estate planning considerations and self-managed superannuation funds.
Learn more about what financial advice can cover through Moneysmart
Your financial position is rarely static. Your income changes, your family changes, legislation changes, markets change and your goals change.
Your financial strategy may need to change with them.
When should you contact your financial adviser?
A simple rule is:
If something significant has changed financially, personally or professionally, tell your financial adviser.
You don’t need to decide whether the change is important enough to require formal advice. That’s a conversation you can have with your adviser.
Sometimes the answer may simply be, “Thanks for letting us know. Nothing needs to change.”
Other times, a seemingly small change can create an opportunity or highlight something that needs attention.
Here are some situations where it may be worth picking up the phone.
1. You’ve changed jobs
Starting a new job can affect much more than your salary.
You may have a different superannuation arrangement, insurance benefits, bonuses, shares or other employee benefits.
Before automatically accepting every default option, it may be worth discussing the change with your financial adviser to see whether your existing strategy still suits your circumstances.
It’s also worth telling your adviser if you’ve stopped working, reduced your hours, become self-employed or moved from employment into contracting.
2. You’ve received a pay rise, bonus or large payment
More income creates choices.
You might increase your lifestyle spending, but you may also have opportunities to make additional super contributions, reduce debt, build an emergency fund, invest, review your insurance or accelerate progress towards retirement.
Rather than allowing additional income to disappear into everyday spending, financial advice can help you consider how that money could support your longer-term goals.
3. You’re buying or selling property
Property decisions can significantly change your financial position.
If you’re considering purchasing your first home, upgrading, buying an investment property, selling property or reducing property debt, speaking with your adviser before making a major financial commitment can be valuable.
A property transaction can affect your cash flow, borrowing capacity, investment strategy, retirement plans, insurance needs, superannuation and overall asset allocation.
Where possible, seek advice before signing contracts or restructuring your finances rather than after the transaction has already happened.
4. You’re considering buying property through an SMSF
Buying property through a self-managed superannuation fund (SMSF) is very different from purchasing property personally.
SMSFs have strict rules around investments, borrowing, related parties, property use and the sole purpose test.
Moneysmart: SMSFs and property
If you’re considering using an SMSF to purchase property, seek appropriate professional advice before signing a contract, paying a deposit or making a financial commitment.
Mistakes involving SMSF property can be difficult and expensive to unwind.
5. You’re starting, buying or selling a business
Starting or buying a business can change your income, cash flow, debt, insurance requirements and superannuation arrangements.
Selling a business can be an even bigger financial turning point.
Wealth that has been tied up in a business for many years may suddenly become available, creating decisions around tax, superannuation, investments, debt, retirement and estate planning.
Financial advice before a major business transaction can help you plan for what happens next.
6. You’ve received an inheritance
Receiving an inheritance can be financially significant and emotionally difficult.
There is often no need to make immediate decisions.
Before investing, contributing money to superannuation, paying off debt, buying property or making large gifts, consider getting financial advice.
The right strategy will depend on your circumstances, goals, existing assets, liabilities and future plans.
Sometimes the most valuable advice is simply helping you establish a clear plan before you act.
7. You’ve married or entered a long-term relationship
Combining your lives can also mean combining financial decisions.
Marriage or a serious relationship may be a good time to review your financial goals, superannuation, insurance, investments, debt, beneficiaries, estate planning and household cash flow.
Your adviser can help you consider how your individual financial strategies fit together.
8. You’ve separated or divorced
Separation can fundamentally change a financial plan.
Your assets, liabilities, income, expenses, superannuation and future goals may all change.
If you separate from your partner, tell your financial adviser as early as practical.
Financial advice doesn’t replace legal advice, but your adviser can work alongside your lawyer and accountant to help you understand the financial implications of decisions being considered.
9. You’ve had a child or your family circumstances have changed
Having children can change your financial priorities.
You may want to reconsider your personal insurance, emergency savings, household budget, investments, education funding, superannuation, beneficiaries and estate planning.
Similarly, if adult children leave home, return home or need financial assistance, your adviser should know.
Helping a child with a house deposit, providing a loan, acting as guarantor or gifting a substantial amount of money can affect your own financial security and retirement plans.
10. You’re thinking about retirement
Don’t wait until your final day of work to start thinking about retirement.
Retirement planning can begin years before you actually retire.
Depending on your circumstances, there may be strategies involving superannuation contributions, pensions, investments, debt reduction, cash reserves and retirement income that are better considered well in advance.
Your adviser can also help you explore the bigger question:
Can I afford to retire?
11. You’re thinking about making a large super contribution
Superannuation can be an important part of building wealth for retirement, but contribution rules and limits apply.
Before making a significant contribution, particularly close to the end of the financial year, speak with your financial adviser and accountant where appropriate.
Depending on your circumstances, you may need to consider contribution caps, unused concessional contributions or bring-forward arrangements.
ATO: Super contribution caps and limits
Don’t assume that because money can be transferred into superannuation, it necessarily should be.
12. You want to withdraw money from your super or pension
The same principle applies when taking money out.
Before making a significant withdrawal from superannuation or a pension account, speak with your adviser.
A withdrawal may affect your retirement income strategy, investment position, future cash flow or other financial arrangements.
13. You’re worried about investment markets
Market volatility is one of the most common times people feel compelled to make changes.
It can also be one of the most important times to seek advice before acting.
When markets fall sharply, headlines can make it feel as though immediate action is required. Your adviser can help you understand what has happened, how your portfolio has been affected and whether your long-term strategy has actually changed.
Sometimes changes are appropriate. Sometimes staying with your existing strategy may be more appropriate.
The important thing is to make decisions based on your circumstances and strategy rather than fear or headlines.
14. Your health or ability to work changes
If an illness, injury or another circumstance affects your ability to work, contact your financial adviser.
There may be insurance policies, superannuation benefits or other financial arrangements that need to be considered.
It’s also a good reminder that personal insurance is ideally reviewed before a problem occurs, rather than only when you need to make a claim.
15. A family member dies
The death of a spouse or close family member can create numerous financial decisions at a time when making those decisions may be particularly difficult.
There may be superannuation, insurance, investments, pensions, estate matters and cash-flow issues to work through.
Your financial adviser can work alongside your other professional advisers to help you understand what needs to happen immediately and what can wait.
16. You’re making a significant gift or helping family financially
Parents and grandparents increasingly provide financial assistance to younger family members.
You might be considering contributing towards a house deposit, gifting cash, lending money, paying education costs, helping with a business or providing a guarantee for a loan.
Generosity is important, but so is protecting your own financial security.
Before transferring a significant amount of money, consider how it could affect your own financial plan.
17. You’re taking on significant new debt
Not all debt is the same, and taking on a substantial new liability changes your financial risk.
If you’re considering a large home loan, investment loan, business loan or other major borrowing, it may be useful to speak with your financial adviser.
Your adviser and mortgage broker may consider different parts of the transaction, so working together can help ensure the lending strategy fits within your broader financial plan.
18. Your goals have changed
Not every reason for seeking financial advice involves a crisis or major transaction.
Sometimes you simply change your mind.
Perhaps you once planned to retire at 67 but now want to retire at 60.
Maybe overseas travel has become more important. Perhaps you want to work fewer days, buy a caravan, move closer to family, purchase a rural property, start a business or leave a larger inheritance to your children.
Your financial strategy exists to support your goals.
If your goals change, your strategy may need to change too.
19. You don’t understand something
This may be the simplest reason of all to contact your financial adviser.
If you receive a statement you don’t understand, have questions about an investment, see something concerning in your superannuation account or read something online that makes you question your current strategy, ask.
A good financial advice relationship should give you somewhere to take those questions.
You should understand what you own, why you own it and how your strategy is intended to help you achieve your objectives.
20. Before you make a major financial decision
There is one particularly important word here:
Before.
Financial advisers can often provide more options before a transaction occurs than afterwards.
- Before selling an investment.
- Before making a large superannuation contribution.
- Before retiring.
- Before buying an SMSF property.
- Before making a significant withdrawal.
- Before gifting substantial money.
- Before restructuring investments.
- Before committing to a major financial decision.
That is often the best time to seek financial advice.
You don’t need to wait for your annual review
If you have an ongoing relationship with a financial adviser, your annual review is important, but your financial life doesn’t operate according to an annual review calendar.
Things happen throughout the year.
If something significant changes between reviews, tell your adviser.
Sometimes no action will be required. Sometimes a quick conversation will be enough. And sometimes that phone call will identify something that deserves more detailed advice.
What should you tell your financial adviser?
You don’t need to decide whether something is technically a “financial advice issue”.
Simply tell your adviser when something meaningful changes.
A useful question to ask yourself is:
“Could this change my money, my family, my work, my assets, my debts, my superannuation or my future plans?”
If the answer is yes, it’s probably worth mentioning.
Your adviser can then determine whether the change affects your existing strategy and whether further advice may be appropriate.
Financial advice is about more than investments
One of the biggest misconceptions about financial advice is that you only need a financial adviser when you have money to invest.
Investments are only one part of financial planning.
Good financial advice connects the different parts of your financial life.
Your superannuation affects retirement.
Your mortgage affects cash flow.
Your income affects your ability to invest.
Your insurance can protect your financial strategy when life doesn’t go according to plan.
Your business may be one of your largest assets.
Your family circumstances influence your goals.
And your retirement plans can affect decisions you need to make years beforehand.
Looking at these decisions together can provide a very different perspective from considering each one in isolation.
When is the best time to get financial advice?
The best time to seek financial advice is often before you need to make the decision.
You don’t have to wait until you’ve accumulated substantial wealth.
You don’t have to wait until retirement.
And you certainly don’t have to wait until something has gone wrong.
Financial advice can be particularly valuable at financial turning points, when the decisions you make today could influence your position for years to come.
This article is intended for general information only and does not constitute financial product or taxation advice. It has been prepared without considering your personal objectives, financial situation or needs. Before making any financial decision, you should seek professional advice appropriate to your individual circumstances.