This weekend rounds off Money Week, an annual campaign by Sorted aimed at raising the financial capability of Kiwis and demystifying key financial topics.
A topic we can all understand is coffee, wouldn’t it be great if making financial decisions were as simple as buying a cup of coffee?
Let’s use our regular Monday morning stop at the local café as an example.
When you arrive at the café you know that you’d like a cup of coffee, you know the price, and even if it’s going to be dairy-free or not. Everything is clear.
The only question you may face is “would you like that as a regular or large?” This may result in the following questions running through your mind, will you be able to finish the large coffee? What’s the price difference?
Often financial decisions require further consideration.
Just like the coffee situation you may know what you want. For example, in ten years some may want to purchase their first homes, or even be retired and living a luxurious lifestyle with vacations now and then with minimal financial stress. But the big question is how you will achieve that.
The ‘how’ can be blurry for some. You may have questions running through your mind that need more comprehensive answers to give you comfort, not often as easy to answer as ‘would you like that as a regular or large?’
How should I save for retirement?
How do I know I have chosen the right type of investments?
Can I afford a new house?
This is where financial advisors come to play and become the answer booklets to these questions. Their primary goal is to help clients determine whether they are on the right track to meet their goals and outline their path to overall financial success.
Richard Kliplin, CEO of Financial Services Council says that “New Zealanders who do get advice save more, invest more, travel more and overall have improved wellbeing. On average, financial returns for Kiwis that get professional advice are 4% better than those who don’t, they save 3.7% more, and travel six times more[1]”
Let’s put this 4% into real terms, if a 25-year-old was to take financial advice, they would be $1.5 million better off at the age of 55 than if they didn’t take that advice.
Now that’s a return that no Kiwi would want to miss out on, a return that financial advisors make easier to reach.
Knocking on the door of a financial advisor makes reaching financial goals smoother and calmer without the extra stress of knowing if you’re on the right track. An advisor understands your goals and risk appetites to make sure that you reach your financial long-term goals. They understand that the real value of having a financial adviser is the peace of mind it gives you, the sense of security and confidence about the future.
As Mellody Hobson has rightly said, “if you understand how money can work for and against you, you can make better decisions. Financial literacy is not about wealth but about understanding money regardless of the amount. It’s about how you treat it and how you maximise opportunities.” A fee only, independent financial adviser understands that each client has different financial goals, therefore, portfolios are tailored to suit their needs and help them achieve their financial goals.
You’ve already got your coffee order sorted so there’s no time like the present to get your financial affairs sorted too.
· Nick Stewart is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay-based CEFEX certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver solutions.
· The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
[1] https://www.fsc.org.nz/bulletin_display/x_blog_code/2110.html
