What’s the single best financial decision you’ve ever made? No, I’m not writing about the 2009 purchase of a two-bedroom townhouse in inner-Sydney, nor am I referring to picking stock-market winners on the ASX. In light of the findings so far from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the headlines have been both damning and excruciatingly embarrassing for the National Australia Bank Ltd. (ASX:NAB) and Australia and New Zealand Banking Group (ASX:ANZ) in March, and the Commonwealth Bank of Australia (ASX:CBA),…
You can continue reading this story now by entering your email below
What’s the single best financial decision you’ve ever made?
No, I’m not writing about the 2009 purchase of a two-bedroom townhouse in inner-Sydney, nor am I referring to picking stock-market winners on the ASX.
In light of the findings so far from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the headlines have been both damning and excruciatingly embarrassing for the National Australia Bank Ltd. (ASX:NAB) and Australia and New Zealand Banking Group (ASX:ANZ) in March, and the Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corp (ASX:WBC), and AMP Limited (ASX:AMP) more recently.
Frankly, the revelations from the Royal Commission have been worse than expected, given there’s been much more than a few isolated cases of terrible advice, conflicted by huge commissions as the advice was.
The misleading of regulators, such as in the case of AMP, shows how easy it has been to game the system leading to the terrible client experiences we’re reading about today in the press.
If you’re needing help with a financial road-map, and simply don’t know where to start — hint, it may not be your bank in the very first instance — here are four simple things you can do in your chase for quality and impartial financial advice.
The very best financial decision you can make then is to attend to the basics, educate yourself first, and then question everything when it comes to seeing an adviser.
Get your household balance sheet in order
You need to be disciplined with your money. There’s no point seeking advice to retire on $2 million if you have only $50,000 in super and are spending 100% of what you earn. That’s a reality check you can do yourself before going anywhere near an adviser.
Likewise, if you have a large mortgage, you should accept that one of the best strategies is to simply increase your repayments and reduce the term of your loan/s — it’s simple, but effective. This will save you a bucket load of interest and release you early from the lender’s ‘death pledge’ [old French meaning for ‘mortgage’].
In reducing your mortgage, you’re increasing your financial flexibility, positioning yourself for advice that’s better atuned for savings and investment opportunities elsewhere, hopefully to get you closer to your financial goals.
Arm yourself with the time to learn
In all cases, having some clue about things directly relevant to your own financial circumstances is key. You don’t need to be an expert, but much of the basics relating to savings, investment, superannuation, social security and insurance can be found online — as a starting point.
When it comes to actually speaking to a financial adviser, being equipped with the fundamentals means you’ll be able to push back if you need to, and query aspects of the advice given.
Don’t be a ‘know-nothing’ patsy when receiving advice.
Ask for referrals
In most cases, recommendations from friends, family and/or professional colleagues is a good way to find a reputable adviser. If they’ve had success and enjoyed satisfaction in seeing a financial professional, it’s likely you’ll have the same experience.
Check with professional associations
Despite the awful headlines, there are trustworthy advisers out there that will put your interests first, but don’t just go with the first individual you come across. Given it’s your financial future at stake, ensure you interview at least three advisers from different organisations. Ask them for referrals, and understand their key strengths, their fees, and whether they provide genuine on-going advice.
Don’t give up on finding someone you can trust.
Foolish bottom line
Even if many of the awful practices of our large financial institutions were substantially rubbed out altogether, it’s still incumbent on you to boost your defences.
You understand your situation better than anyone, so document this. Ascertain what you’re trying to achieve, whether this be a comfortable retirement, a business purchase, or an education savings plan for the kids.
Read widely, and pepper your adviser with questions when you eventually sit down with one. The very best investment plan is arming yourself with knowledge before you allocate a single dollar.
Failure to do so could prove catastrophic.
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Edward Vesely has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.