Late June of 2017 marked an important milestone in my career; over a decade since becoming a financial adviser. When I first started, fresh out of university as a trainee adviser, I swiftly discovered that there was a big difference between the theory I had learnt and the practical. I realised that working with people, their lives, their dreams, and their individual issues, produced difficult and yet rewarding challenges. Now, with 10 years under my belt I have met with hundreds of clients. Below are a few things I have learnt about financial planning; it’s not only about the numbers, it’s also about the people.
Time Is Critical
Time waits for no one. Superannuation and savings are the same. I emphasise to my clients to start now, don’t delay. The earlier in your life you start saving, whether it be for a house or retirement savings (superannuation), the better. It is never too late to start. Compound interest is your best friend when it comes to saving but it needs time to work. Doing something, is better than doing nothing.
There Are No Crystal Balls
It is impossible to predict how the market will act. Just look at the changes that have occurred over the last 10 years; the GFC, the abrupt end to the mining boom (2012), Brexit, Trump’s election, and most recently trouble in North Korea and Kim Jong Un. No matter how much you think you know, you cannot predict where the markets will go.
I was fortunate (or not) to start working just before the Global Financial Crisis (GFC). This is considered to be the worst crisis since the Great Depression. In just a short time the Australian market fell from a high in November 2007 of 6,800 points to a low of 3,120 points in March 2009. A fall of 54%. It was a difficult time for anyone with investments. Panic struck. It was a profound example that the most important thing when investing is diversification and “time in the market”. The stock market is now back to 5720 points.
Debt Is Like An Illness
Debt is like an illness and just like any illness it is best to treat the cause not just the symptoms. It is easy to implement debt reduction strategies to systematically pay off one debt at a time and then move onto the next. What is harder to change is the cause; the behaviours which got you into debt in the first place. Learning to say no to things you can’t afford (keeping up with the Joneses) and not just putting them on the credit card, or waiting until you have saved up the cash to purchase new things, is truly working on the cause of the issue. If you don’t treat the cause you are doomed to repeat the same mistakes.
The Importance Of Feeling The Consequences
It is human nature to take the path of least resistance. I have seen many clients in my time with short term debt trouble (mainly car loans and credit card debt) have their parents bail them out of debt, only to find themselves in debt again not too far down the track. Often these debts have come about because of a whim; purchasing cars or holiday they cannot afford. Lessons are only truly learnt if you feel the consequences. Feeling the burden of having to pay off your credit card and then the joy and satisfaction of finally being about to say you paid it off are beneficial for behaviour modification. It is these life lessons which help change behaviours and set you up for long term success and financial mindfulness.
Being An Employee Is Not For Everyone
In my job, I see many people unhappy in their careers. Being an employee is not for everyone. If you are stuck in a job you hate, in the long run this will work against you. I have seen firsthand the benefit of taking that leap of faith and having a crack at that “something” people are passionate about. The old saying is true “if you love your job, you never have to work a day in your life”. It has been a joy to watch many of my clients take that step and witness the change in their lives. Financial planning isn’t just about setting you up for retirement. It is also about helping you achieve your dreams along the way.
Job Security Is More Than Just About Money
Having a job is one of the most important things in someone’s life. It is paramount. Over the years working with those transitioning to retirement, I have learnt that working means more to people then just financially supporting their families. Not only does it fund one’s life but it also gives a sense of purpose and belonging, somewhere to get up and go to in the morning and helps them feel they are contributing to society. It is part of their identity. When working with clients readying for retirement it is an important issue I like to raise with my clients. What will give them purpose and satisfaction in retirement? It is something many don’t think about, but is crucial for happiness in retirement, hopefully a good 20+ years of your life.
We Are Only Limited By Our Ideas (And Commitment)
I see an array of different people in my job. I have seen clients on the verge of bankruptcy pull themselves out of debt. I have witnessed the beginning of new exciting ventures. Anything is truly possible. I have learnt that we are only limited by our ideas and more importantly, our commitment.
What About The Next 10 Years?
Higher Education Standards
From 1 January 2019 new professional standards will come into effect as mandated by the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (Cth), with transitional arrangement applying to existing advisers. This is a significant change to the financial planning industry which will see advisers required to hold a bachelor or higher degree, pass an exam, undertake at least 1 year of work and training and meet requirements for continuing professional development. The Act also requires the standards body to make a Code of Ethics which advisers must comply with. These changes will provide a strong barrier to entry for those wanting to become an adviser and will hopefully lift the overall reputation of advisers in the wider community.
The average age of an existing adviser in Australia is currently 61 years. As the baby boomers start to retire opportunities to purchase existing businesses will arise. This is exciting for someone like myself who meets the new education and training requirements as it means that my business will be able to expand and assist a wider client base with achieving their goals.
Financial advisers must act with integrity and in the best interests of their clients. A good adviser will focus on the quality of their financial advice whilst also adhering to sound compliance standards. Any industry regulation that requires advisers to undertake excessive tick the box exercises will not be of any benefit. The adviser will incur additional business costs that will ultimately be passed onto the client and the quality of the advice will remain the same.
From a superannuation legislation perspective, I would like to see less chopping and changing from both sides of politics. Too many changes erode confidence in long-term investing and that uncertainty can act as a disincentive to save.
In my own business, I am excited about technology advancements. I soon will be implementing online meetings which will enable clients to discuss their financial planning affairs from the comfort of their homes or offices where we can see each other, go through advice documents, and even sign online. This will make the financial planning process much easier and provides clients with a new level of convenience.
Financial planning is and has been a very rewarding career choice. I have had the privilege to help many singles and couples achieve their financial dreams; be it a house, a family, a business or to caravan around Australia.
Who is Elliot Watson?
Contact Elliot Watson Certified Financial Planner to seek his advisory services for yourself. Phone 02 4032 7934 or email firstname.lastname@example.org
The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee’s position, and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author”.
Elliot Watson Financial Planning Pty Ltd and its advisers are Authorised Representatives of RI Advice Group Pty Ltd, ABN 23 001 774 AFSL 238429. The information (including taxation) in this article does not consider your personal circumstances and is of a general nature only – unless otherwise stated. You should not act on the information provided without first obtaining professional advice specific to your circumstances.
 Corporation Amendment (Professional Standards of Financial Advisers) Act 2017 s 921B
 Corporation Amendment (Professional Standards of Financial Advisers) Act 2017 s 921U(2)(b)
 Corporation Amendment (Professional Standards of Financial Advisers) Act 2017 s 921E