I want to be rich. How do I choose a planner?

Dear Aunty B,

My husband and I have a growing small business that we have both been working full-time in for over two years. Up until now we have focused on reinvesting in the business but we think it’s time to ensure that we are also building our personal wealth.

In addition to paying ourselves a regular wage, we are considering seeing a financial planner, with the aim of having an external review of our personal investments, superannuation, etc. We are both reasonably financially educated and have some of our own active investments but would like to get an independent assessment.

Can you provide any advice on how we start to look for a good financial planner? We want to make sure that we see someone who has more financial expertise than we do and can provide some independent advice (we’re aware that most, if not all, financial planners seem to have arrangements with product sales and commissions).

Where to start?
Thank you

Dear Where to start,

Glad you asked. I had a few spare seconds while floating around the Mediterranean wondering which island serves the best coffee.

Of course, the answer to this question depends on who you ask.

You can ring the Financial Planners Association and they will give you the name of someone in your area. You can ask your friendly banker and they will give you a planner tied to your bank. You can ask your accountant and they may well insist they can do the job! You can talk to your friends and they will wax lyrical about their rich mate who knows all the right stocks. Which is the point. If it were easy to be rich everyone would be doing it, not just Warren Buffett.

I know you are busy, but you always have time to read. So you should do it yourself! You read SmartCompany to learn to grow your business. And you should read online publications like Eureka Report or Intelligent Investor and learn how to invest.

Yeah alright. I know you don’t have a lot of time at this stage. So I asked two blokes about it.

The first is Greg Hayes from accountants Hayes Knight. I don’t know how rich he is and it’s a bit rude to ask, but he makes the good point that it is like choosing any specialist. You meet with a few planners and then select one you feel comfortable with.

He says to ask them how they typically work with clients, what advice and assistance they provide and how they charge for their services.

As for commissions, he says that is okay as long as they are absolutely transparent about how much they will be paid and the services and advice you will receive.

Providing you know what you are paying you can judge the value for money based on the services they are providing to you.

I also asked James Kirby, who is the editor of Eureka Report. He says to stay away from planners employed by major banks or insurers. Try to use a planner who charges by the hour and always test their independence by asking about commissions and how they charge.

Once you choose a planner, minimise the amount of money you put in ‘wrap accounts’ and be very careful of any planner who talks too much about ‘gearing’ (that is taking out loans) or anyone who wants to put most of your money in ‘actively managed funds’. Instead keep some cash, explore ‘index funds’, buy blue chip shares directly and don’t forget direct property.

Once you’ve made your fortune do come and join me on my yacht and we can swap tips.

Good luck,
Your Aunty B

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