4 valuable wellbeing benefits of working with a financial planner you trust

Two businessmen smile and shake hands

Life is a long and complicated journey, often with more than its fair share of obstacles to overcome along the way. So, it's vital that you have the right people by your side to help you face any challenges and help you stay on track to achieving your life-long goals.

Money, or your finances to be more precise, can be one of those great challenges. It can be a source of a lot of stress and worry.

A trusting relationship can act as a sounding board and give you that push you need to act in your best interests. As world renowned financial life planning coach Anthony Mitch likes to say: “Hold your feet to the fire of your good intentions.”

In working with a financial planner that you trust, you can benefit not only financially — but, perhaps even more importantly, emotionally — as a good relationship can make your life easier, free up your time, and help you to meet your long-term objectives.

The 18th century theologian, Isaac Watts, once famously said: “learning to trust is one of life’s most difficult tasks”. However, once you’ve opened up to someone and allowed for that positive dialogue, the benefits to your mindset can be significant.

Read on to discover four valuable benefits to your emotional wellbeing that can be provided by financial planning alongside someone you trust.

1. A financial planner can provide emotional support and help you forge a positive mindset

It is natural to feel a degree of nervousness as you deal with the pressures of your personal finances. The decisions you make regarding your savings, investments, and pension pot could end up affecting the rest of your life.

That’s why it can be so beneficial working with a financial planner you trust.

A landmark study by Royal London revealed the many positive wellbeing benefits of working with a planner you trust. They found that individuals receiving financial advice felt more in control of their finances, more financially secure, and more confident about the future compared to people who did not seek advice.

Source: Royal London

The emotional support a good financial planner can provide, can reassure you every step of the way along your personal journey.

This regular coaching from your financial planner can significantly improve your future choices and in doing so, help improve your sense of wellbeing.

Human beings are hot-wired on an instinctual level to make impulsive decisions. It is a leftover trait from our ancient ancestors and our “fight or flight” response.

In the past we may have had to concentrate on avoiding being eaten by predators and making sure we had enough food to last the day. Nowadays, our problems are less immediately life-threatening on the whole, but that negative impulse remains as part of our inherited mindset.

It can leave you almost hard-wired to make poor financial decisions.

In working with a financial planner you trust, you can unlearn this innate way of thinking and improve your future decision-making and overall sense of wellbeing.

2. A financial planner can help with your workload and help you avoid a costly stumble

A financial planner can take some of the workload off your shoulders and help you navigate all the potential pitfalls that may affect your plans along the way.

One easy misstep to make is paying unnecessary and avoidable taxes.

A financial planner can help you to:

  • Take advantage of tax relief and build your wealth as tax-efficiently as possible
  • Determine the right way to withdraw your retirement funds, as well as deal with any regulations around them or if you choose to transfer them overseas
  • Plan your will and how you will deal with your estate, so your loved ones don’t lose a substantial chunk of your hard-earned money to a hefty Inheritance Tax (IHT) bill.

Retirement planning is a large part of the offering a planner can present to you.

They can also provide superannuation contribution strategies to utilise opportunities surrounding contribution caps. This can involve equalising super balances between spouses to facilitate the maximum amount of tax-free income in retirement while reducing your taxable income during your working life.  

It can be a complicated issue and the best next step in tackling it is reaching out to an adviser you trust.

When dealing with cross-border issues they can also help you deal with defined benefit (DB) transfers and transferring funds to a qualifying recognised overseas pension scheme (QROPS).

3. A financial planner can help you make calm investing decisions

Terms like “volatile market” or “looming recession” can sound downright scary and often elicit emotional, knee-jerk reactions in investors.

The concept of “loss aversion” posits that human beings feel the pain of losses twice as strongly as the pleasure of gains. So, during periods of economic downturn, it can be easy to be influenced by negative emotions and feel an urge to part with your investments.

Markets have historically rebounded given time and it can be short-sighted to ditch your holdings to protect your money, as over periods of 5-, 10-, or 15-years markets typically trend towards positive returns.  

This is particularly the case in a high inflationary environment like the one we’re experiencing in the present.

This “V-neck” in markets can be tricky to steer. If you opt out, it can be difficult to tell when to opt back in.

The chart below is the MSCI world equity index and shows how the peak (at the onset of global lockdowns in early 2020) to trough, and its consequent return back to the levels of early March 2020 took less than three months.

Source: Business Insider

As American business magnate and investor, Warren Buffett, put it: “the stock market is a device for transferring money from the impatient to the patient”.

In selling your shares during an economic downturn, you are essentially locking in a loss, and removing the potential for an upturn in your investment as and when the market recovers.

For example, the median annual return for the FTSE 100 (one of the UK’s leading indices), for any 10-year period between 1984 and 2019 (as reported by IG) was 8.43% with dividends reinvested.

Even after the worst-case scenarios, such as the 2008 recession, we can see from ONS figures that in the 10 years following, the UK economy witnessed 11% growth after the initial 2008 dip. The economy will typically recover given enough time.

It is essential to remember that financial planning is typically about reaching goals over years and decades, not days, weeks, or months.

No one can predict the market and adopting a prudent, patient “buy and hold” approach will likely see positive outcomes for you in the long-term.

So, when it comes to long-term investing for your retirement, it pays to zoom out and look at the bigger picture. As zooming in can be unsettling and may have a negative impact on your emotional well-being.   

4. A financial planner can ease your worries about the future and help you meet your long-term goals

One of the benefits of working with a financial planner is that it is intended to be a long-term relationship.

You will likely meet on at least an annual basis to review your progress towards your goals, and to adapt your plan if necessary to ensure you stay on track towards meeting your ambitions.

A study by the International Longevity Centre (ILC) found that building an ongoing relationship with a financial planner tends to lead to better financial outcomes.

People who received professional financial advice between 2001 and 2006, and continued to receive advice in 2014 to 2016, had approximately 50% higher average pension wealth than those only who only sought advice at the start.

As cheesy as it sounds, a good financial planner will become a friend, an extended family member, and part of your tribe. Never underestimate the value of a trusting relationship.

Get in touch

If you have any lingering concerns or worries about your financial situation or future plans, please take a moment to reach out.

In starting a dialogue, you are taking the first positive step towards better emotional and financial health. Please get in touch by email at jason@jasonoconnell.com.au or call 0498 740 840.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

Financial solutions for expatriates in Australia | Jason O’Connell is an Authorised Representative (“AR”)  1269423 Shartru Wealth Management. ABN: 46 158 536 871 operating in Australia under AFSL: 422409.

This information in this newsletter is general advice and does not take account of investors’ objectives, financial situation or needs. Before acting on this general advice, investors should therefore consider the appropriateness of the advice having regard to their objectives, financial situation or needs.

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