I went to see a financial adviser this week. I did so for a variety of reasons but the crux of it is that I’m now a parent, and have been for 18 months.A lot has changed in this period. (Accepting that it’s unlikely I’ll see the inside of a restaurant that doesn’t have wipe-down plastic-covered menus for the next 15 years is one change). The new reality is that I now have responsibilities beyond that of keeping myself breathing.
I’ve always been bad with money. I’ve never been able to save properly, and other than migrating to Australia a decade ago, I’ve never really had something to save for. I don’t own any property.
On the other hand, I don’t have any debts. I lead a quiet life for the most part; save for the 7pm tanty as bedtime approaches. And that’s just my partner.
The thing is, I’ve never felt like I needed to see a financial planner because I never felt like my finances were remotely complicated enough for me to need help with. This was, of course, before I realised I need a plan beyond “Thailand for two weeks at the end of the year”. Becoming a parent and being almost 40 is a wonderful way to see how you need to start building for your future, and doing so now.
However, after a career working entirely in full-time employment, I now find myself working for myself as a sole trader, earning more income than I ever have before, and also genuinely fearing that I’m totally failing to make that success work for me, and work for my family.
First advice meeting
And so, this week, I sat down for a first advice meeting at the office of a financial planner. We met a week previously at an event we both attended and ended up having a coffee so he could fill me in on a small association he’s involved in. During our conversation, he said I should see an accountant because my sole trader set-up probably wasn’t the best way to approach my work. So I did, and the accountant sent me back to the planner for super and insurance advice. They’re friends and know each other well. And so here we are.
I told him that I was basically financially illiterate. He said that was okay. He started asking me what my objectives were, and I didn’t know. I ended up saying that buying a house in three years would be good, but I don’t actually know if that’s what I think my goal should be. It sounded right, but maybe I need to revisit it. He ran through what it is that he does, and although he did it is as clearly as possible, I found it hard not to get lost in the terms. It isn’t even that it was that complicated, but moving from insurance, to cash flow, to having a Will, to the ethos of his investing proved hard to comprehend.
One basic thing
I think some of what followed can come down to one basic thing. Despite my belief I’m at least average in the smarts department, I felt stupid. Despite the best attempts of the adviser and his assistant, over a now-cold cup of coffee, I ultimately felt stupid. I felt inadequate; that despite whatever grand vision I had of myself, I had no fundamental understanding of the basics of finance. This is not a good feeling, and once this settled upon me I know the answers coming out of my mouth were at least slightly tinged with the notion I didn’t want to sound thick. Hence why I now said I wanted to buy a house when I wasn’t sure that I really did.
He spoke about two options when it came to insurance, where I could pay $2000 for lower premiums, or pay nothing and he would get commissions. I couldn’t visualise the benefit or hindrance to either of these, so opted for spending the money for lower premiums. Three minutes later, when my spend right there at the table was clicking up by the thousands, I backpedalled and went for the free option. I have no idea if that’s better or worse for me.
Spend-fear kicks in
The planner’s fee structure is tiered, and as spend-fear had now kicked in, I went for the lowest package, with an outlay of $1890+GST and a monthly fee of $150. This didn’t include the basic “cash flow management” service, which in discussions with colleagues and my partner we determined to probably be pretty damn important as the foundation to everything else. So I emailed him and bumped up my level; but to get cash-flow management I’m on the second highest tier, with an outlay of $2890+GST, and $270 per month ongoing.
These numbers aren’t great in the grand scheme of things, but I think I was surprised to be making a $6000 commitment ($8000 had I opted for the other insurance option) at that initial meeting. I’m so used to not having money to spend that I get a twisted gut buying a suit for work for $500. The expenditure made me feel a bit sick. I thought there would be an initial conversation where I’d be told what he could do for me, but apparently that was it.
It’s not that I don’t value the advice, because I plainly do, and I have great respect for those in the profession who are trying to provide transparent advice with no litany of charges like hourly rates for catching up and so on. I’m just surprised that we accelerated to that point of proceedings so quickly.
