Human advisers

An adviser who holds a Financial Services License (or is authorised under one) is able to recommend a product.

The benefits of an adviser are;

  • Experienced
  • Qualified. Education requirements have been dramatically improved.
  • Must act in your best interests. “Conflicted” product recommendations are no longer allowed.
  • Advisers are increasingly adding the benefits of technology to their service.
  • Must act in your best interests. “Conflicted” product recommendations are no longer allowed.

The drawbacks of an adviser are;

  • Expense. The recommendation can cost around $3,000. There are probably further costs like implementation costs, on-going costs and investment manager costs. An active manager typically charges between 1% and 1.5% of the amount invested. First year costs could easily add up to $6,000.
  • Time. It can take weeks from first consultation until your recommendation is ready.

Find an adviser

The best place to find an adviser is at Adviser Ratings

Robo advisers

A robo adviser must also hold a Financial Services License. Typically you will be asked some online questions to establish your risk profile. The “Robo” will then place your investment in a relatively low cost “passive fund” like an ETF.

A $50,000 investment, returning 7% p.a. for 35 years will grow to $325,691 with an “active manager” fee of 1.5%. Using a Robo adviser with a fee of 0.5% the balance will be $455,240. A 40% improvement.

The benefits of a robo adviser are;

  • Costs. The costs of using a robo adviser are typically much lower.
  • Time. Your money is usually invested and working for you much quicker than with a human adviser.
  • Many robo advisers accept relatively small initial investments.

The drawbacks of a robo adviser are;

  • Robo advisers usually focus on investment. A human adviser can give “holistic” advice, covering all aspects of financial planning.
  • An robo adviser generally has a more restricted range of products.

Find a robo adviser

Here is a non-exhaustive list of robo advisers;

DIY

Online tools, information and products make DIY an inexpensive, viable option.

The benefits of DIY are;

  • You decide on the product.
  • You decide on the investment strategy .
  • You decide on where you get your advice.
  • There will probably be cost savings.

The drawbacks of DIY are;

  • You may not have sufficient knowledge or experience.
  • You may not understand the product description well enough .
  • You may misinterpret the online tools or information.

There are a number of online sites offering insurance policies. Here are some of them.

Find insurance

Signing up comes with an automatic seven day free trial, after which you are billed. If you would like a different trial period contact us at contact@finchat.com.au