Should I seek financial advice?
Should I seek financial advice? – by Les Mace
Investment markets have recently taken a severe hit due to the coronavirus pandemic sweeping across the world. While this is a concern and many have seen their savings and investments diminish the good news is we have seen such situations several times over the past 120 years and in each case markets have recovered and eventually surged past their previous highs.
The crash of 1929 which led to the Great Depression produced the worst result in terms of losses. According to research published by Morningstar Direct the loss amounted to 79%. The next worst drop came in the decade between August 2000 and February 2009 where the market loss was 54%. Some may remember this as the dot-com crash.
The situation that most closely resembles the current crisis is the 51% market drop experienced between June 1911 and December 1920 which included the 1918 Influenza pandemic. World War 1 had an impact on this result also of course. Each of these market crashes were significant and proved that investing in equity markets can be risky.
So, what are we to do with our investments in these troubled times? The first point to make is – do not panic. Be patient, markets recover and generally favour the well diversified and patient investor.
The best recommendation I can give is to seek advice from a professional Financial Planner. A good Financial Planner will first seek to get to know you, understand your goals and objectives, your time horizon, your tolerance to investment risk, any government legislation that may impact you and of course your financial circumstances. They will then review your existing portfolio and conduct exhaustive research to determine whether it is aligned to your goals and then give you advice. They must act in your best interest.
How do you find the right Financial Planner?
There are lots of Planners to choose from, so here are a few tips on what to look for and a few questions to ask:
- Who is responsible for the advice you give me? Financial Planners either have their own Australian Financial Services License or they operate under someone else. Make sure you are comfortable with the entity that is responsible for the advice you receive and that they have adequate dispute resolution capability.
- What are your qualifications and experience? Financial Planners must disclose this information to you before providing any advice. If it’s Aged Care advice you are after, make sure the Planner has the relevant qualifications, not all do.
- What will the advice cost me now and on an ongoing basis? Again, a Planner must disclose this to you in writing before giving you advice. You will find it in their Financial Services Guide and in the written statement of advice you must receive before advice is accepted and implemented. Make sure you understand what is disclosed.
- Other considerations include making sure the Planner has no conflicts of interest, has membership of a professional association, has access to a broad range of product solutions and no history of unresolved client complaints.
If the above is a bit daunting, we would be happy to help you find the right Financial Planner. You can access us via www.newwaytostay.com.au/contact or by calling us on 1800 370707.
Les Mace is a Director of New Way to Stay Pty Ltd. He is not a financial planner and none of the above information is intended to be financial advice. The information is general in nature and does not consider your personal circumstances. You should seek advice before making decisions about your investments.