Financial planning: Your questions answered - Education Matters Magazine


Financial planning: Your questions answered

Financial tips and tricks for today’s educators and education sector staff by the Financial Planning Association of Australia.

Financial planning is about developing strategies to help you manage your financial affairs and meet your life goals – and the first step is to make sure you have access to quality advice.

If you could achieve your financial goals by simply putting money away in the bank, you wouldn’t need a financial plan. Unfortunately, life is a little more complex – it’s hard to understand the intricacies of investment, taxation and ever-changing rules and regulations, so you need professional help.

Yet many of us resist seeking advice, as if our financial future weren’t just as important as our health or our children’s education. We often decide to manage our financial affairs ourselves, or leave it to someone we know, which is a bit like buying vegetables at the butcher’s.

Many people make the mistake of thinking that financial advice is for high net worth people who have money to invest and multiple assets. However, financial advice can also help people plan for things as simple as a holiday to something as important as retirement.

A financial planner will help you reach your goals; even if retirement may seem a lifetime away, the sooner you start planning the more likely you’ll be to achieve financial independence and peace of mind.

Read on to discover how to find a qualified financial planner, decide your financial goals and have a financial plan that will help you take control of your financial future.

Why should I use a financial planner?

Financial planning is a specialist profession and you should make sure that you’re getting advice from a properly qualified person.

A qualified financial planner has the expertise and ethical standards to ensure your finances are in safe hands. These highly-trained professionals are required to be aware of legislative changes and be financially informed to ensure the best advice is provided.

The financial planner should be open to questions about their previous experience, truthful about their level of qualification and the work they offer, and explain the charges and cost prior to any service.

A financial planner can help you achieve both short and long term life goals. These could include:

  • An overseas holiday
  • The cost of extracurricular activities for your children
  • A holiday home
  • A comfortable retirement

What should I look for in a financial planner?

Always look for a planner who works for a firm that holds an Australian Financial Services (AFS) License issued by the Australian Securities and Investments Commission (ASIC). You should ask for a copy of their Financial Services Guide.

Look for a planner who is a member of the Financial Planning Association (FPA). The FPA represents the interests of the public and Australia’s professional community of financial planners. Members of the FPA must meet stricter criteria and higher standards than required by law.

The CERTIFIED FINANCIAL PLANNER® (CFP®) designation is the highest level of certification that a financial planner can achieve. CFP professionals demonstrate their commitment to excellence in financial planning by meeting initial and ongoing competency, ethics and practice standards and agreeing to abide by the standards laid out in the FPA’s Code of Professional Practice. CFP professionals are also members of the FPA, and have achieved the highest certification available worldwide – CFP professionals represent the best of the best in financial planning. There are 5,500 CFP professionals in Australia.

Rapport and trust are essential as your financial planner is going to know more about you than your accountant or doctor, as he or she will have details of your finances, medical history and family situation. If you can’t establish that rapport early on in your first meeting, keep looking.

Financial planning is a relationship business and not just a one-off meeting. Ask plenty of questions about their qualifications, professional memberships and experience. Remember that good advice is concise and easy to understand.

When will I need financial advice?

Most people seek advice from a financial planner when they hit major life milestones. This can include:

  • Entering the workforce
  • Being made redundant
  • Buying your first home
  • Deciding to start a family
  • Inheriting money
  • Approaching retirement

While it is important to have qualified financial advice to help you through these events, according to Mark Rantall, CEO of the FPA, you don’t need to wait in order to benefit from establishing a relationship with a professional planner.

“The younger you are when you realise the importance of needing to save and invest the better,” he said. “It will mean that when it does come time to buy a house or retire you will be financially prepared and have an existing relationship with a financial planner to help navigate the complexities of investing, taxation and debt.”

How do I identify my financial goals?

People often turn to a financial planner to help simplify their finances and set achievable financial goals, providing greater confidence to plan for their future. These goals can include:

  • Paying off your student loan
  • Paying off the mortgage
  • Paying off any short term debt e.g. cash loans, credit cards
  • Having enough money to retire at a certain age
  • Contributing to your savings goal each week
  • Saving for an investment
  • Saving for a holiday

In order to achieve these financial goals, a financial planner will be able to help you with budgeting, cash flow management, a savings plan, superannuation, tax planning, home loan repayments, debt management and reduction, insurance, investments and retirement.

Your financial planner has a responsibility to provide the best possible financial advice for your situation. Ask him or her ‘how will you help me to reach my goals?’

Your financial planner’s responsibilities are to make clear recommendations, outline the risks involved and communicate any possible strengths or weaknesses in the plan. Remember that your financial planner cannot predict the market or ensure investments are always favourable.

Short term financial advice

Are you saving for a holiday or buying a new car? Short term advice can help you set achievable goals to be accomplished in a short timeframe of six to 12 months. The financial planner will look at your income and expenses and create a financial plan specifically for your lifestyle, so you’ll be on that holiday in no time.

A financial planner can also help with many other short term financial goals that include selecting products (superannuation funds, term deposits), reducing debt, household budgeting and increasing your savings.

Medium term financial advice 

Generally speaking, maintaining your financial goals is an ongoing process, especially as your income, expenses and tax situation change. You may have several goals and require a comprehensive financial plan to cover finances, such as home loans and investments. A financial planner will help set goals within a medium timeframe (one to four years) and establish a financial plan with strategies for achieving those goals.

You should consider the level of risk you are willing to take in terms of investment to ensure a suitable investment strategy is implemented. Those seeking broader financial advice may have continuous meetings with their financial planner, at least once a year, to alter the financial plan in accordance with their situation.

Long term ongoing financial advice

Financial security and wellbeing is generally achieved over a long period and is ongoing. Long term financial planning is usually recommended for those with multiple assets and investments and to help people prepare for retirement. The financial planner provides regular reviews of the individual’s finances and regularly evaluates their financial goals and strategies.

For those using a financial planner for long term advice, the financial planner will keep you updated with any changes that could influence your investments, such as market slumps. While short term timeframes in regards to growth investment are a high risk, investing over a longer period of time means you can wait out the lows of the market.

Top tip

If you are concerned about having enough money for your retirement, tools such as the MoneySmart Retirement Calculator will help you work out if there is a shortfall in your plan. A financial planner can then help put a strategy in place to ensure you will reach your savings goals and be able to enjoy your retirement without being worried about your finances

Deciding your financial goals can be a difficult process and depending on your financial situation can sometimes be complex. In many circumstances a financial planner can be just what you need to meet your financial goals in a realistic timeframe.

Once your goals are decided, your financial planner will put a financial plan in place.

What does a financial plan include?

Every individual or household is unique and requires a unique financial plan.

A good financial planner will review your lifestyle and create a financial plan specifically suited to you. The financial plan will include financial strategies that will meet your goals. Once you’re satisfied and agree to the suggestions of the financial planner the financial plan will be put into action.

Receiving your advice

Once you have agreed on your plan with your financial planner, a statement of advice will be provided to you. The document will state who is covered by the advice, for example yourself, partner or children and provide a summary of your financial situation.

Your financial planner will make financial advice recommendations including strategies to achieve your financial goals and objectives. This will include products and services to benefit your financial situation, with an explanation of why those were specifically chosen.

You should also receive a clear explanation of the fees and charges paid by you, including the financial planner fees, product fees, the cost of switching products and all future costs. Take the time to carefully look over your financial plan to make sure you understand the recommendations and make any alterations before agreeing to the plan.

Investments and risks involved

The level of investment risk will be stated in the financial plan and should reflect the risks you are comfortable with taking. Ask your financial planner ‘What rate of return do I need to reach my goals?’

Borrowing to invest is popular for those looking to build their wealth in a shorter time frame. However, the risks involved should be explained clearly in the financial plan, such as possible loss of capital, the instability of interest rates, repayments of the loan or unexpected life changes, such as redundancy.

The financial plan should be reviewed regularly (at least once a year) and adjusted according to life changes. If you receive a pay rise at work you may consider contributing the surplus to any savings plan or if you lose your job you will need to consider the impact to your financial position including your financial plan. There could also be situations outside your control, such as a drop in the market value of your investment. You might consider continuing with the product for a longer period of time until the investment improves or discuss changing products with your planner.

A financial plan is a guide to your financial future and a step towards financial freedom and peace of mind.

How do I find a financial planner?

The Financial Planning Association (FPA) website ( is a good place to start looking for a financial planner and for more information in general about financial planning. All FPA members are listed in an online directory called ‘Find a Planner’ that you can search by using your postcode. To go direct to ‘Find a Planner’ go to

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