If you’re retired or thinking about retirement, a financial adviser can play an important role in ensuring you have a sustainable and stable income in retirement, with flexible access to your retirement savings when you need it.
What an adviser can help you with
Good financial advice can help you set realistic retirement goals, put a strategy in place to reach them, and ensure you have an appropriate risk management strategy.
A qualified financial adviser will take into account your overall situation and create a tailored plan.
If you’re planning to develop a long-term relationship with an adviser, it may be worth talking to a few until you find someone you’re comfortable with. Some advisers offer an initial, obligation-free meeting at no cost. While an adviser can help you with a one-off issue, for example managing an inheritance, this article will focus on an ongoing relationship with an adviser.
A Macquarie Wrap account is designed to be managed with the assistance of an adviser.
If you’d like help finding a new adviser, please visit ASIC’s moneysmart website.
Getting a picture of your current and future financial needs
There’s a lot to consider when trying to map out your financial future. Your financial adviser will go through your individual circumstances and help you get an idea of your current and future financial needs so you know what to plan for.
Setting your financial goals
If you’re not clear on what you’re working towards, an adviser will take the time to discuss what's important to you and ask about your short and long-term goals. If you’re not on track to meet your current goals, they can help you adjust your goals or strategy so the goals become achievable.
Putting an investment strategy in place
Once you’ve worked out your goals, your adviser will put together a plan to help you achieve them. This is likely to include an appropriate investment strategy for managing your retirement savings.
In deciding on an appropriate investment strategy, an adviser will take into account your risk profile. They will generally ask you to complete a questionnaire to work out how much risk you’re willing to accept with your financial strategy. This will help them recommend suitable investments for you.
When investing, common goals include trying to maximise growth in the value of your investments or receiving a consistent income from your investments. However, high returns are often associated with high risk and not everyone is comfortable with risks such as potential negative returns. Investing is also about protecting against losses. A financial adviser knows how financial products work in different markets and will be able to explain the potential risks versus benefits of different types of investments, so you can make an informed decision about how to invest your retirement savings. In addition, they’ll make sure you don’t put all your eggs in one basket by helping you diversify your investments.
Monitoring your investments
Your investments need to be monitored in case market conditions change, which may impact your potential returns. Your adviser can keep a close eye on your investments for you and make changes where necessary to help you stay on track to achieving your financial goals.
Planning for retirement
Planning for retirement can be complex. There are different strategies available to try and maximise your expected retirement income. A financial adviser will help you understand the rules around accessing retirement savings and run you through the options available for generating regular income from your savings. They’ll also help you manage potential risks to the sustainability and stability of your retirement income, and provide guidance on how to access your retirement savings for any one-off or unexpected expenses.
Maximising tax efficiency
A financial adviser should consider your tax position when making recommendations to you and help you implement a tax-effective retirement plan.
Determining appropriate levels of capital protection
Securing a healthy financial future isn’t just about how much money you accumulate. Your adviser may also consider how to better protect a portion of your savings from loss. This can be achieved in many ways, for example by investing in assets or asset classes that are less volatile (e.g. term deposits when compared with certain shares) or by securing a portion of your retirement income through products that guarantee an income for a set period or for life, as explained below.
Deciding on an appropriate retirement income product for you
An adviser can help you decide which retirement income products are appropriate for your circumstances. They can work with you to manage your retirement income so it’s sustainable over the duration of your retirement, whilst also giving you access to your money when you need it.
Working out social security entitlements
Another important aspect of your retirement planning may be to work out if you’re eligible for any social security benefits, and if you are, how you can maximise them. For those aged 67 or more, this will often be the age pension.
The age pension can be used to supplement your retirement income and help to make your savings last longer in your retirement. There are also additional benefits that can help with your cost of living, such as reduced utility prices and discounted medicines.
If you aren’t eligible for the age pension, there are other benefits you may be eligible for, for example the Commonwealth Seniors Health Care Card.
An adviser can explain the eligibility rules, including how your assets and income affect your entitlements to social security benefits, so you can set up your finances in the most effective way.
For more information on the range of benefits that may apply to you, you can visit the Services Australia website.
Before you see an adviser
Before your first meeting with an adviser, it's important to work out what you’re trying to achieve. Think about what’s important to you, what your short and long-term goals are and how comfortable you are with taking investment risk.
Giving an adviser accurate information about your situation allows them to tailor the advice to best meet your needs. Try to go in prepared with a list that includes your:
- personal situation: your age, relationship status, dependents and work situation
- assets and their value: any real estate you own, savings, car...
- liabilities: your mortgages, loans, credit card debt and any other debt you have
- income: your salary (if you’re still working), any other income – for example from investments – and any social security benefits
- expenses: your weekly or monthly living expenses
- current investments: superannuation, shares or other investments, including their current value and fees if possible
- insurance policies: any insurance you hold and the amounts you’re insured for
- any will or power of attorney you have in place
- any accountant or lawyer you use
Your first meeting
The adviser will use the first appointment to get a picture of your personal and financial situation, as well as your risk profile, i.e. how much risk you're prepared to accept to reach your goals. This will help them recommend suitable investments and financial products for you.
This meeting is a good opportunity for you see how comfortable you are that the adviser will be able to meet your requirements.
Fee structures
The fees you pay to your financial adviser depend on the services you receive. Advisers can charge fixed fees or percentage-based fees. They may also receive a commission on the product they recommend you.
Your adviser will explain their fees to you in detail before you take up any services. Make sure you understand all fees and ask questions if you’re unsure.
