Independent Financial Advice

What does "Independent Financial Advice" mean, and does it matter?

Independent Financial Advice means that no commissions, volume based payments, gifts or other benefits are received by the adviser.  Independent advice should be free from conflicts of interest. This is one of the key reasons independence matters.

In Australia, to provide financial advice requires one to either hold a license or be an authorised representative of a license holder.

The vast majority of financial advisers in Australia provide advice as the authorised representatives of a financial services license holder.  Many, if not most of those representatives are in the business of selling financial products.

I (Joe Sharpe) hold my own financial services license, issued by ASIC.  I don't sell financial products or recommend specific products offered by financial institutions or other third parties. I am not affliated with any dealer groups.

Issues to be aware of in the financial planning process.

Buying a financial product differs radically to most other types of product you can buy in Australia.  If you buy a product at your local store and something goes wrong with it, you can take it back and seek a refund.  If you put money into a managed investment scheme which loses money - your options may be much more limited.  

The financial planning process seeks your informed consent to pursue a financial plan.  Personalised financial advice must be accompanied by a Statement of Advice (SoA) detailing (amongst other things) what assumptions have been made and any limitations regarding that advice. Financial Products must be accompanied by a Product Disclosure Statement or PDS. This is for your benefit as a consumer; but that isn't the end of the story.

Conducted correctly, which is to say in accordance with relevant legislation; financial planning and product advice leaves you liable for your own financial choices.  This extends to the financial products you buy and the financial plan you pursue. 

The money in your Super is just as real as money in your bank account.  Do you know what fees are associated with your Super fund or how fees and other expenses within your fund might affect the growth of your savings?  Do you know how much money is in your bank account and how much goes into and out of it each month, more or less?  What about your Super?

You may end up paying commissions to the planner selling you the product over several years.  That money might be being taken out of your premiums or directly from your super fund.  Obviously, people have to be paid for the services they perform, but do you know what commissions and management fees you are paying and why?

Are you seeing this kind of information on other Financial Advice webpages?  Or are you seeing sales patois about your dream retirement and the extensive experience of chain of people employed to get you there? Perhaps some sunny beaches, golf carts and middle aged people smiling serenely into middle distance? And a tiny little bit of text about commissions being extracted from your savings along the way? I'm curious.

A financial planners legal duties include "knowing their client" and "acting in their clients best interest."  Yet many if not most financial planners are in the job of selling products.  Further, financial planners act under a "fiduciary duty" where it must be assumed that there is a disparity between what you (the customer) knows about a financial product and they (the professional planner) know. So:

If you yourself haven't considered your goals and objectives thoroughly, how can a planner act in accordance with them?

  • Are you taking responsibility for choices you understand?  If so, to what extent?
  • Have you identified your financial risks?
  • Are your goals realistically achievable?
  • How do you balance your capacity to save with your quality of life needs now?

Your options as a consumer are to select financial products (like superannuation or insurance) either actively, pursuing answers and seeking advice, or passively by making broad brush choices about products (like super) that may or may not contain other products (like life insurance and income protection). Is your employer just plonking money in your Super every month while you sit hoping that it will be enough for when you retire?

The advice I provide should help you to identify good questions to ask about your current financial product providers about your existing choices. You may also want to explore the many different choices available to you - so that you can, if you like, go on to explore particular products yourself or seek advice from those authorised to sell them. Outide of SMSFs' I only provide General Advice about different types of financial products - so I won't recommend that you should take out a policy.  But I will explain why people do make such choices and some factors to be aware of.

Financial planning isn't just a process of identifying goals and objectives and fitting products to them.  It should be ongoing. It can be creative.

  • Might you need less retirement savings if you can earn an income from consultancy into your late 60s?
  • How does an investment property work in an SMSF?
  • How can I managed my contributions between salary sacrificing and non-concessional contributions?
  • How do I balance the need to invest in my business with saving into super?

I may be able to help with some of these questions too.  For a full explanation of the limits of advice I can provide, please ask for my Financial Services Guide. Details of the advice I am licensed to provide are below.

 

What advice is Joe licensed to provide?

I am authorised by ASIC to provide advice on "classes of product" as follows:

  • Basic deposit products, such as term deposits.
  • General insurance products (e.g. business insurance and mortgage insurance).
  • Life risk products (e.g. income protection, life insurance, total permanent disability insurance and others).
  • Simple managed investment schemes.
  • Securities (classes of shares, diversification within portfolios, risk management strategies).
  • Superannuation.
  • Self-Managed Superannuation (see SMSF page).

The authorisation to provide "class of product" advice means I am authorised to recommend, for example, that you take out a term deposit; but not which term deposit you should take out.

In addition, I can provide tax advice and accounting advice; in my capacity as a tax agent and accountant.  This means I can cover matters such as:

  • Tax efficiency of a particular investment strategy (e.g. capital versus income producing investments).
  • Advice on investments that are not (technically) financial products, such as investment properties.
  • Business strategy.
  • Budgeting.

For more details, call or email to request a Financial Services Guide (FSG).

How are fees calculated?

Fees for Financial Advice and related services are charge on a time-billing basis at $330 per hour inc GST, calculated in six minute intervals.  To ensure sufficient time to cover all relevant details, some consultations are subject to a minimum timeframe.

To help you keep costs down, consultation fees for the services listed below can be split amongst up to three attendees.

What services are available?

A range of financial services are available.  See our Financial Services Guide (FSG) for full details.  The tables below set out specific consultation services.  These services were developed in response to address frequently asked questions and address specific needs raised by clients in consultations. Additionally, Financial Advice on SMSFs is available - see the FSG and SMSF webpage for details.

 

 General Advice Services  

                                                                       

 

Prices inc GST

 

 

General financial advice, provided after your tax consultation has finished. Topics covered can include general insurance products, life risk insurance products, simple managed investment schemes, securities and superannuation.  

General advice is not tailored to your specific circumstances, so no recommendations will be made to obtain a specific product or follow a course of action.

 

$330 per hour; up to 3 people can attend and split the bill, no minimum fee. 


General financial advice
as above when booked separately to a tax consultation.

As above, minimum fee $165 applies.


Understanding the Financial Planning Process.

The importance of understanding your own needs and objectives and how that works with financial planners' legal obligation to "know your client".

Insight into the financial planning process including drafting your personal budget and financial objectives:

  • What are your best interests?
  • Ways to identify your goals.
  • Are your goals realistic?
  • What is a risk profile?
  • Is it possible to say what risk really means?
  • What is a financial plan?
  • What is a 'Statement of Advice' and some of the limitations likely to encountered?

This structured consultation aims to provide an insight into the financial planning process and arm you with tools which will be useful to help you ask pertinent questions when considering the selection of a financial planner; as well as useful questions to ask about financial products you already have, or are thinking of getting.

Beyond that, it should help you to start considering and setting out your retirement objectives and financial goals. 

As above, minimum fee $165 applies.

 

Investment Property and Buying versus Renting

Investment Property Considerations

I can't recommend whether you should buy an investment property, or whether the one you have selected is a good choice.


This structured consultation should be useful to anyone contemplating the purchase of an investment property. It covers, in general terms, each of the following:

  • Your loan repayment budget and things that can affect it.
  • Based on your deposit, loan repayment budget, NSW stamp duty and rates of interest, what is the largest amount your budget will allow you to borrow. How this amount may varies with different rates of interest.
  • Other factors that can affect what you can afford.
  • Income and tax deductions for rental property including depreciation. 
  • Capital Gains Tax and the Main Residence Exemption.
  • Risks and risk management including types of insurance that can be useful.
  • Working out whether you are ahead or behind and how changes in property prices, inflation and interest rates can affect this.
  • Conflicts of interest that can arise with investment property internal and external: Your own expectations, Agents, brokers.

You will be asked to complete a questionnaire before this consultation, to help you get the most out of it.  You'll also be provided with an explanatory briefing which explains the limits of the advice we can provide.

You can use real figures from your real estate agent about for prospective property in this consultation including purchase price, expected rental rates and bills.

$330 per hour. Upto 3 people can attend and split the bill. One hour minimum fee $330 applies.

Buying versus Renting and "Rentvestment"

This structured consultation explores some of the pro's and cons of buying versus renting as well as rent-vesting - which means rent where you live whilst owning an investment property elsewhere.

This consultations considers:

  • What would it cost to buy the same place you are currently renting; comparing like with like.
  • How property price growth and rental price rises can affect which option is best from a financial perspective.
  • Patterns of renting and ownership in other countries.
  • Risk factors: property price growth and property bubbles, interest rate changes, inflation, changes in legislation.
  • Non economic factors: stability, security and owning your own home.
  • Investing to get onto the property ladder: rentvestment.

This consultation aims to give you more information about the potential risks and rewards of owning your own home as well as helping you compare your out-of-pocket costs for buying a similar property to the one you currently rent; based on numbers provided by you.

You will be asked to complete a questionnaire before this consultation.  You'll also be provided with an explanatory note with more details about what advice we can and can't provide.

$330 per hour. Upto 3 people can attend and split the bill. One hour minimum fee $330 applies.

 

 Budgeting and Planning

 Budgets for Indivduals and Partners.


A personal budget can be a useful tool for you and for the financial planning process.


Your personal budget review examines:

  • Your income and outgoings.
  • How much surplus income you might have.
  • What salary sacrificing is and how it works (if relevant).
  • Your personal assets and liabilities.
  • Identification of what provisions you currently have in place (are you insured, do you have super etc).  Types of insurance provisions that exist, what they do and types of conditions they are subject to.  This advice will be of a general nature.
  • Projections of future worth of retirement savings, ongoing contributions, based on rate of return and inflation (not specific policies).
  • Adequacy of retirement savings and how factors such as life expectancy, legislation, inflation, interest rates, property values, desired quality of life and costs of living can affect how much savings might be needed. 

You will be asked to complete a questionnaire before this consultation.  You'll also be provided with an explanatory note with more details about what advice we can and can't provide.

 

$330 per hour; fee can be split amongst those attending. Maximum 3 attendees.  Half hour minimum fee applies.

Joe Sharpe AFSL:484867

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