Is Professional Retirement Advice Worth The Cost Or A Waste Of Money?
As retirement draws near, you might find yourself reflecting on your readiness.
Have your plans kept pace with life’s changes, or are there uncertainties about retiring on your terms? More importantly knowing whether you’ll have enough to sustain a comfortable retirement lifestyle?
It’s common to have thoughts of “I should have started earlier”…the good news, there’s still time.
So where do you turn for guidance? Friends, family, or perhaps a specialist retirement planner?
After all, you wouldn’t turn to your family and friends to seek advice on a medical issue…you’d go see your doctor. Retirement planning is no different, you can’t afford to be misled or receive uninformed advice from friends and family.
You may have nagging doubts about seeking professional retirement advice. Questioning whether it’s worth the money. After all, it’s not cheap but should be considered an investment in navigating your retirement with clarity and confidence.
All are valid concerns, but what are the costs of going it alone…
The real cost of going it alone…
While many navigate the journey to retirement solo, successfully amassing their nest egg, planning one’s retirement often brings a tide of doubts. It’s completely different mindset, going from saving and accumulation to spending and decumulation.
It’s not a time to go in blind…
Many are lost at sea trying to answer two very important questions:
#1 Will I have enough money to live a comfortable retirement?
#2 Will I be okay in my retirement years?
It’s a little like car maintenance: A mechanic’s expertise is invaluable. Similarly, navigating retirement without a deep understanding of the pitfalls, blind spots, risks and financial planning can be risky.
Retirement planning shares similar parallels.
Without expertise in retirement planning, you risk navigating this crucial phase of your life with uncertainty. Just as most aren’t mechanics, many haven’t retired before, making expert guidance not just helpful, but essential.
The pitfalls of self managing your retirement…
Opting to navigate retirement planning alone is a path some choose, especially those who believe they have a firm grasp on the intricate details. But “maybe” isn’t reassuring when your future is at stake. Nor is it fair on your partner.
After all you only get one shot to get it right…
Consider John and Jane’s story. Amid the COVID-19 crisis, with markets plummeting, they received advice from a friend at a casual BBQ. Convinced the market would continue to plunge further, they shifted their superannuation to a more conservative option.
When we met with them recently, we discovered this decision had a staggering cost – a loss of $200,000. A seasoned retirement planner could have steered them away from such a costly error. Now they are left with trying to rectify their mistake which will take time…perhaps time they don’t have.
Debunking the Myth: Is Professional Retirement Planning Advice Really Too Expensive to Justify?
A common misconception is that professional advice is too expensive. Yet, as John and Jane’s experience shows, the absence of expert guidance can lead to far more significant financial losses.
Retirement planning is a high-stakes endeavor. You have the opportunity to optimise your savings for a fulfilling retirement. The question is, are you willing to take that chance without expert advice.
Shattering Common Misconceptions
It’s a familiar concern: professional advice seems costly, and past experiences might have left a sour taste. Perhaps you’ve encountered advice that felt more like a sales pitch, or advisers more focused on their gains than your financial health.
These experiences foster limiting beliefs, potentially derailing your retirement dreams.
But let’s set aside anecdotal experiences and dive into concrete research…
Validating the Worth of Financial Advice Through Research
Countless studies, including Vanguard’s Adviser Alpha, Russell Investment’s Value of an Adviser, and Morningstar’s Value of Adviser’s research, have consistently shown the tangible benefits of quality financial advice.
For instance, Russell’s 2023 study quantifies this benefit at an impressive 5.9% pa of an investor’s wealth, while Vanguard’s analysis suggests a more conservative 3%.
To put this into perspective, if you have $500,000 in superannuation, this could mean an annual benefit of $15,000. If you portfolio was $1,000,000 it would equate to $30,000 – significantly outweighing the average adviser fee. While such returns might not be uniform each year, fluctuating with life events and market conditions, the overall trend is clear: professional advice pays off.
Real-Life Impact: Joe & Cindy’s Success Story
Consider Joe and Cindy, pre-retirees disillusioned by past experiences with financial planners. With around $1.4m saved for retirement, they were cautious but hopeful.
Our collaboration not only added an estimated $200,000 to their retirement funds – equivalent to three extra years of income. But we also identified strategies to enhance their estate by up to $165,000. All this for a relatively modest advice fee of $4,000.
For Joe and Cindy, the value was not just in dollars and cents. They gained clarity and confidence in their retirement plans, coupled with peace of mind – a priceless outcome. They are now actively planning their exit from the workforce.
You might be thinking this is an isolated case. It’s not and more often than not they are the results we regularly a achieve for the clients we work with.
Beyond the Numbers: The Comprehensive Role of a Financial Adviser
Redefining the Adviser’s Role
The common perception is that a financial adviser’s primary role is to manage investments. While that is a crucial component, it represents just a fragment of their true value.
Exceptional advisers delve deeper, aligning your money with your core values and aspirations. They invest the time in understanding what truly matters to you, laying the groundwork for a financial strategy that resonates with your personal goals.
Our client’s best life is at the centre of every financial decision they make. Our framework is designed to guide clients a methodical path to help them live their best life with confidence and without regret.
Crafting a Tailored Financial Journey
It’s only after understanding your unique values and objectives that a financial adviser can effectively guide your retirement planning. This approach ensures that every financial decision is a step towards realising your life’s ambitions, living your best life, not just a monetary target.
The Growing Demand for Qualified Advice
Alex Dunnin, Executive Director of Research and Compliance at Rainmarker, highlights a concerning trend: a significant 43% decline in advisers since December 2018. Projecting a 17% increase in pre and post-retirees over the next decade.
The imbalance suggests an impending shortage of advisers capable of having the capacity to cater to the growing needs of pre-retirees seeking advice.
“If these adviser numbers continue to dwindle, we may face a severe shortage per capita of advisers available for pre- and post-retirees”, Dunnin cautions. This looming gap underscores the urgency and importance of seeking financial guidance sooner rather than later.
As a business which specialises in retirement planning, while we still have room for more clients there will come a time where we will not be able to accept new clients.
With a significant decline in the number of financial advisers and an increasing population of baby boomers retiring, finding a skilled retirement planner is becoming more challenging.
The Value of Expertise
Navigating retirement planning requires an intricate knowledge of the rules and legislation combined with the risks tied to the retirement landscape.
The landscape keeps changing and this may significantly impact your retirement strategies if you don’t know what you are doing.
For instance, we’ve been walking alongside pre-retirees and retirees for over 20 years while navigating world events like the September 11th, Global Financial Crisis, Covid-19 and everything in between. You could say we know a thing or two about navigating the retirement landscape.
We spend every waking hour thinking about retirement planning.
Take Kathy for example. We spoke recently. They had never engaged a financial planner, however, wanted to make sure they were going to be okay financially in retirement.
While they had saved diligently, as Kathy was explaining their finances it came to light they could have implemented a number of strategies many years ago that would have seen them in a better financial position today. Time and money they will never get back…
Without completing a deep dive, I knew straight away there were a number of strategies and tactics they could implement that would improve the amount of money they had when they decided to retire. It was significantly greater than the fee we would be charging for the advice.
Sure you can muddle your way through. It will take you longer, you may make some costly mistakes along the way and you may still be thinking, “Will I be Okay?”.
The value of a retirement planner lies in their deep understanding of the financial landscape and their ability to guide pre-retirees and retirees through the complexities of retirement planning.
By leveraging their expertise, you can make informed decisions that enhance your financial security and peace of mind through your retirement years.
Tailored Strategies for Your Unique Journey
Every couple and individual’s journey through retirement is unique, shaped by their life experiences, financial circumstances, and aspirations. A one-size-fits-all approach does not suffice when it comes to retirement planning.
This is where the expertise of a retirement specialist becomes invaluable, crafting a retirement roadmap tailored to your specific needs and goals.
The first step is walking through what your best life looks like. What are you doing? What experiences do you want in retirement?
It’s about you…
The second step is working out if your current plan is realistic. Are you on track to live the lifestyle you want in retirement?
Once you’re clear on this, the next step is making your plan resilient and optimising your plan.
For instance, we recently worked with Matt and Jane. They wanted to retire and start their travel adventures.
In working with Matt & Jane, we discovered their initial plan was overly optimistic. In fact if they were to retire today, their money would have run out in their early 70’s.
By recalibrating, we helped them set a more realistic and sustainable path for retirement. By bringing forward their travel adventures and working a little longer, Matt and Jane had a plan to retire with enough and had clarity about the actions they needed to take.
Peace of Mind
Beyond the tangible financial gains, a well-crafted retirement plan offers invaluable psychological benefits.
Besides financial benefits, most are looking for peace of mind – knowing that your financial future is secure and your retirement years are well planned.
In other words, you know you’ll be okay in retirement…
Many enter retirement with extreme anxiety and uncertainty. This is the same whether you have a lot of money or a little.
One of the primary benefits of having a solid retirement roadmap is the significant reduction in anxiety about the future.
Many worry about outliving their money or facing unexpected financial hurdles during retirement. Without a well thought out retirement plan, you risk regret. Regret you could have done more had you’d known.
A well thought out roadmap addresses these concerns head-on, allowing you to look forward and plan with confidence and clarity.
Imagine for a moment you’ve got a well thought out plan to live your best life in retirement. You know you’re going to have enough money. You’re going to be able to experience everything you wanted.
How would that feel?
Ready to gain clarity and a roadmap for retirement? Book your Retirement Clarity Call by clicking here and embark on a retirement journey tailored just for you.
Glenn Doherty – CFP – Financial Planner | Retirement Planning Made Simple for aspiring grey nomads and avid travellers within 7 years of retirement
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Schedule hereAdvice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at date of publication. This is an online information blog. It does not imply an offering of securities.