Self Managed Super Funds (SMSFs) are known for their inherent complexities that make even the most experienced investors in Australia shy away from them. A survey of high net worth investors conducted by Hall & Partners Open Mind exclusively for The Australian’s Wealth Intelligence Series revealed that only 21% of the 202 respondents were in SMSFs despite the respondents having more than $500,000 in investible assets. 47% of them said setting up a SMSF would be a daunting task while 42% of them said they could not manage their fund better than a super fund or professional manager. It is rather evident from this survey that most investors would rather get the help of a financial advisor to help manage their super funds; and with good reason. While looking for an advisor, the most important factor to consider is the independence of the financial advice to be offered.
The very concept of saving for retirement has gone through a myriad of developments in the recent years. Savers are no longer adopting a lackadaisical approach but instead are taking a more proactive one; seeking to invest directly in different asset classes outside their super and keeping up to speed with the global and local financial news. Above all, the new breed of investors has discovered the importance of independent financial advice over specialist knowledge. Good financial advisors are able to stand apart from undue influences and make the correct and uncontaminated decision on given issues relating to investment options of you. This is the hallmark of independence.
Whereas independence remains a subjective concept, perhaps the best way a financial advisor can be deemed to be independent is putting his or her clients’ interests above theirs. With an independent financial advisor, you are more likely to have access to the best financial advice given your needs and circumstances. The federal government’s new ‘Future of Financial Advice’ legislation resonates with this principle.
A quick check of the Financial Services Guide of your prospective financial advisor can shed some light on the matter of independence. All licensed financial advisors are required to provide one. You should carefully scrutinize the products and services offered and determine whether or not they are owned by the advisors and to what extent they are owned by them. Financial interest in such offerings is likely to impair the independence of financial advisors. You also need to request for a meeting with your potential financial advisor before settling with him or her. This meeting will offer you a grandiose opportunity to evaluate the suitability of your financial advisor in terms of professional independence.