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Outsourcing your money management

Tags Money Management
Category Budgeting Investment

An image of a piggy bank getting a health check

While it’s entirely feasible to make your own investment decisions, outsourcing your money management can save you a lot of time and potentially create better returns.

The world’s best-selling financial guru recently filed for corporate bankruptcy. It seems that even Robert Kiyosaki, author of Rich Dad, Poor Dad, could have done with some outside financial advice. Which rather raises the question of whether the rest of us would be wise to employ someone to help us manage our wealth.

Do I need help?

If you have an interest in investing and the time to devote to developing some expertise, you can probably find all you need on the internet or the finance section of your local bookstore to manage your money effectively. But if you want to outsource this time-consuming task, there are a variety of options.

If you only have a relatively small amount of capital, the best course of action may be putting it in a high-interest term deposit or managed fund. That way, you’re getting the benefit of having financial experts look after your money while only having to pay a relatively small amount for their services.

One-to-one assistance

Your accountant should be happy to answer your questions about the merits of different types of investments, particularly in terms of their tax implications. That may sufficient for your needs, but if you want more comprehensive assistance you’ll need to find a financial planner. A planner will determine your financial goals then recommend investments that will allow you to achieve them.

How do I find a financial planner?

Just like finding a great doctor or tradesman, you can ask friends for recommendations. If they can’t help, you can go to www.fpa.asn.au to find a planner in your area. A good planner will take the time to listen carefully to you and clearly explain where they can and can’t add value. Always ask a prospective financial planner the following questions:

  • Are you licenced? They should own or work for a firm that holds an Australian Financial Services (AFS) licence. Ideally, they should also be a member of the Financial Planning Association.
  • Why are you the right person to grow my wealth? The qualifications and areas of expertise of financial planners vary. If you’re a 25-year-old entrepreneur wanting to become a billionaire, you’ll probably require a different financial planner to a 55-year-old concerned he doesn’t have enough superannuation.
  • How much do you charge? Different financial planners will have different fee structures. Whatever they are, planners are legally and ethically obliged to disclose all payments and fees you’ll be liable for upfront.

Suze Orman, an American money management guru, tells people they’ll find the best financial planner in the world by looking into a mirror because, “No one will ever care as much about your money as you do.” That’s entirely true, so never forget that whatever advice you receive, you are the one who has to accept final responsibility for deciding where to invest your money.