Good intent possibly doing more harm than good

Most of us have an opinion on almost every topic … be it the weather, interest rates, the best way to butter toast or who’s going to win the footy on the weekend and why. Just recently with the Rio Olympics I found myself becoming somewhat of an armchair expert. Despite having almost no knowledge of most Olympic sports, I was only too willing to tell anyone within earshot why Australia was robbed in synchronised swimming or why our shooters did so well.

On the most part having an opinion is not such a bad thing; after all it’s who we are and makes us individuals. However, when it comes to the important stuff in life it’s important to be able to distinguish an opinion – no matter how well meaning – from sound, expert advice. Put it this way, a vet might be an expert in small mammals and while there may be a degree of crossover knowledge, you wouldn’t risk the health of your child based on their opinion, no matter how good intentioned it was.

We often see this with our financial advice clients and prospective clients. Family, friends and colleagues provide “advice” on a whole range of financial topics from what shares to buy/sell, which investment property is right, what home loan is the best, why negative gearing is great and what to do with your super to retire rich. The problem is, despite the good intent, in almost all of these cases the person giving their opinion doesn’t have the appropriate training and qualification, knowledge, experience and worse still, aren’t licensed to provide this advice. They are also providing their opinion without fully understanding your current situation, where you want to go and what needs to be done to get there.

The other area we see this occurring is with some of our clients’ other trusted professionals such as their accountant or solicitor.  While there is some small overlap between financial planning and these other professions, ultimately they are experts in their respective fields and financial planners are experts in theirs. You wouldn't see an accountant about a traffic ticket just as you wouldn't go to your lawyer to get your tax done. I’ve seen two recent examples where these trusted professionals have over reached their area of expertise and unnecessarily confused or worried an otherwise very happy client.

Towards the end of the financial year one of our clients’ accountants suggested that, for tax purposes, they make concessional contributions to super and they had better do it ASAP or miss out. The clients spoke to their adviser who suggested they meet to see how this would fit in with their current financial plan, their cashflow and the achievement of their goals. But the client panicked and sent the contribution for the amount the accountant suggested to their super fund before meeting their adviser. The problem was that knee-jerk reaction, created by a conversation with their well-intentioned accountant, caused them to breach their contribution cap for their super. Fortunately we were able to resolve this issue for our client and they are back on track, but there was a lot of unnecessary confusion and inconvenience caused by this well intended but poor “opinion”.

The second was where a client’s accountant told them their financial advice fee was too expensive for the funds they had in their super. While it’s great to think the client’s accountant was looking out for their best interest it showed he had a blinkered understanding of what financial advice was all about. The accountant didn’t understand the fee covered the ongoing advice for not only the super fund in question but also their cashflow, investment, estate planning and debt.  While he was focussed on a single line item our financial planner had the big picture in mind and once the client realised this they relaxed knowing they were back on track to achieve their goals.

There are a lot of so called experts out there and almost everyone is keen to share their opinion but for sound, trusted, advice speak to an authorised financial adviser.