Ask An Adviser - Would You Recommend Using A Smart Tool Before Seeing A Financial Adviser? (2)

Top answer provided by:

Eric Walters

Great question Nicole – and one that many new investors amongst the ‘under 40s’ are asking quite regularly. 

At first instance, I have taken the question to be asking if we can recommend a smart tool to use before seeking financial advice: as you will see later in my reply, the visit ‘to an adviser’ might become a two-staged process (and may involve two separate advisers): the first, a financial adviser (not necessarily a registered financial planner at this point); and the second, a financial planner.  But, read on….

Answering your question on this platform, it would be remiss of me to not mention the Page on the Adviser Ratings website, linked below:
Online smart tools – to which they have added the blurb: “(Smart tools) Also known as 'robo advice' products, these tools deliver advice online using algorithms and technology in place of a human financial adviser.”

You will find 45 products listed on that Page and whilst I am unable to commend or endorse any of them, you will need to identify what your investment or financial management needs are and then research what each one can do for you: and this is where we might be able to get around the possible conflict between me as an adviser giving you that suggestion and a natural instinct to promote the use of a financial planner at first instance.

Whilst most financial planning firms who have operated for over twenty years (as my firm has) are staffed with experienced, competent, qualified and registered advisers, most of us also recognise that not everybody is ready for comprehensive advice at first instance.

The tools that financial planners use in their advice businesses are generally focused differently from those servicing the DIY/ ‘Robo advice’ market: they tend to be more complex/ comprehensive than what I understand the smart tools to be – and they cost more as well.

I mentioned above that you should find tools that help you satisfy your financial management needs: this is where that first visit (to a financial adviser) might be useful.  If when making the appointment to see the adviser, you make it clear what you are wanting to achieve, that you are not yet ready for formal financial planning advice but need help to identify what financial management needs require skilling up (i.e., the areas of financial literacy that you do not feel that you are currently competent), you should leave the meeting with information such as needing to:

1. Understand cashflows;
2. How to set (and live to) a personal budget;
3. Keep records as to money coming in, going out and surpluses accumulating – and how to manage shortfalls;
4. Be able to allocate surplus cash flow to known expenses, emergency reserves, future expenses – and discretionary expenditure,…amongst others.

This first adviser (and in my practice that would be a financial planner as we are all authorised representatives of an Australian Financial Services Licensee, all on the ASIC Financial Adviser Register; and have all passed the FA Exam) should be able to help you identify specify the particular areas (including those from the above list) that you could benefit from utilising one or more of the smart tools available.

You could then take that information away and start researching¹ the tools that will help you get started with your financial/ wealth management plan.  Once you make that start, you may benefit from staying in contact with a financial planner to review progress and ultimately, to undertake more comprehensive financial planning: and you can be fairly confident that the adviser you first approached in this journey will stay in contact with you to check how things are working out for you.

We have recently published an eNews article that provides some guidance on how to select a service or product with trust and confidence.

While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.

Article by:

Eric Walters

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