IF you are one of the almost 70 per cent of Australians who do not have a financial adviser, it could be time to bite the bullet.

Some people will always want to go it alone in investment. they approach looking after their investments as their job, studying investments thoroughly, and they are well-informed and capable. It’s no accident that, according to research house Rainmaker Information, self-managed super funds at present hold $414 billion, or one-third of the nation’s superannuation pool.

But not everyone has the inclination or the expertise to run their investments themselves. Indeed, most people do not. In particular, the wave of baby boomers beginning to head into retirement could do with some help, says financial services industry consultant Tom Collins.

“The system is so complex that you really do need good technical advice,” Collins says. “Otherwise you could end up paying a lot more tax than you should have paid and missed out on benefits that you should have got.

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“That technical side is still where a good financial adviser adds the most value. I think [most] baby boomers starting to retire would need quite a bit of help with the technical aspects of superannuation and retirement. you don’t necessarily have to use a financial adviser for investment advice, but if someone is getting near to retirement, they really should be using a planner to get technical advice on tax, superannuation and social security.”

Andrew Inwood, managing director of marketing research firm Brand Management, says there is another good reason for getting an adviser-planner, which stands out from the research his firm has conducted: people with a financial planner are happier.

“We have data that proves that a good financial planner adds not only money but happiness to people’s lives,”Inwood says. “We can prove that empirically. Someone’s level of happiness isn’t subjective, it’s an objective thing that you can actually prove by asking a series of questions and understanding the answers; you can pretty clearly map people’s levels of happiness and satisfaction.

“People [who] have a planner and a financial plan in place are much more likely to understand and be in control of their future than people who don’t have a plan. And those two things are very strongly aligned to happiness.”

Financial planners have copped a battering in the media in the wake of several high-profile collapses that have left investors out of pocket, as well as the gradual exposure of the practice of charging investors commissions that, if not hidden, were not exactly shouted from the rooftops. But according to Mark Rantall, chief executive of the Financial planning Association of Australia, advisers have a critically important role to play as an ageing population looks to take responsibility for its retirement income.

“I think the profession would admit that there have been problems in some quarters, some within the control of the financial planner, but mostly product-related. But the research that has been conducted shows that somebody who has been advised is generally better off than somebody who hasn’t sought advice; and, also, that the vast majority of people who see a financial planner are happy with their planner and are better off for the experience. We believe that more people could benefit from such a relationship than presently do.”

Rantall says the average superannuation balance was only $70,000 at July last year.

“Clearly that’s not going to be enough to provide someone’s retirement income,” Rantall says. “So getting advice in terms of the goals and objectives that the client might set, and then the appropriate strategies to meet those, is critically important. We think there has been a misconception that ‘If I’m contributing to super then I’ll be OK and be able to fund my retirement.’ But we know that about 80 per cent of the baby boomer population — people who are 40 years-plus — doesn’t believe they have enough money to retire on, and time is running out to get their financial affairs in order.

“There is a huge need for the services of advisers, to help them accumulate capital and then to help them [transform] that capital into retirement income.”

Under the Future of Financial Advice reforms announced by Financial Services, Superannuation and Corporate Law Minister Chris Bowen in April, financial advisers will not be able to be paid by commissions from product manufacturers. Since the financial services reforms began in March 2002, investors have had full disclosure of all payments to advisers relating to the investments they make, but the prevalence of commissions has made the process appear payment-free to many investors.

Under FOFA — which had not passed parliament before last month’s election — investors will be faced with some form of up-front payment. This will make the initial process faced by a new client different from what it has been in the past.

“Generally financial planners have a discussion to see whether they can help the client first,” Rantall says.

“But I think from there the work that needs to be done will be costed out on the basis of complexity and what actually takes place.

“An investor might be charged in a variety of ways, depending on the work that’s done. At one extreme, the advice might be strategic and no investment is made. At the other extreme is the situation where the investments take place and the investor is charged.

“That mix of charging methods has been evolving for some time, but it could range from a flat dollar amount, an hourly charge, a retainer fee through to percentage [of invested assets]-based fee, depending on the work that’s actually done for the client.

“Most financial planning firms will charge a plan fee because they have to put a statement of advice together and map out a strategic plan.

“But, legally, all of this must be fully disclosed to the client.”

It is not hard to find a financial adviser. The FPA offers a planner-finding service at www.fpa.asn.au. The Association of Financial Advisers offers one at www.afa.asn.au. The Independent Financial Advisers Association of Australia assists people to find an independent financial adviser at www.ifaaa.com.au, as does the Association of Independently Owned Financial Planners at www.aiofp.net.au.

Research house Rainmaker offers a planner-finding service at its Select Adviser site at www.selectadviser.com.au. CHOICE Online, at www.choice.com. au, gives help under “popular searches”, under the letter F. The websites of any bank, or insurance companies such as AMP, AXA and MLC, provide links to help you find a planner. Just going into a bank or insurance company branch can be a start.

Collins says such a find-a-planner system is “probably better than opening the Yellow Pages”, but adds that the best thing that someone looking for a financial adviser can do is to work out in their own mind what advice they’re looking for, and then talk to their friends and colleagues.

“One of the best forms of referral that financial advisers have is word-of-mouth. So if someone is looking for a planner, and their friends have someone who has done well by them for years, that’s a good sign.

“It’s all about being comfortable with the person and who they work for. That’s the major issue and I think that takes a bit of homework. you don’t sign up with the first person you talk to,” he says.

Rantall says the FPA’s find-a-planner service is simply to show clients “who is around in their area” because the association “wouldn’t want to recommend one member over another”. he says ultimately it is up to the client to determine which adviser best suits their needs.

“We encourage our members to market themselves: practice management is one of the areas of ongoing education that we have,” Rantall says.

“Generally there are three ways to attract clients: referral from existing clients; referrals from centres of influence, for example accounting firms, legal firms; and the third way is directly through marketing; that activity could be advertising, seminars, sponsorship.

“But at the end of all of those processes is the interaction between the client and the adviser, and that’s always up to the client to assess.”

<a href="http://www.theaustralian.com.au/business/wealth/investors-who-seek-advice-are-better-off-and-happier/story-e6frgac6-1225911086434tag:news.google.com,2005:cluster=http://www.theaustralian.com.au/business/wealth/investors-who-seek-advice-are-better-off-and-happier/story-e6frgac6-1225911086434Tue, 31 Aug 2010 14:06:46 GMT 00:00″>Investors who seek advice are better off and happier