1. Home
  2.  / The Value of Using a Financial Adviser

The Value of Using a Financial Adviser

Some people think a financial adviser is there solely to choose investments, but there is so much more they can bring to the table, writes Laine Moger.

10 May 2023

A financial adviser is going to be your investment “hype girl” (or guy).

If you want to retire at 55, send your kids to university or help them onto the property ladder, these professionals are there to make those financial goals a reality.

Some people think a financial adviser is there solely to choose investments, but there is so much more they bring to the table.

Sure, a financial adviser will run the numbers for you. But more importantly, they will keep you accountable to your investment goals and also provide you with access to financial products. This is where the real value lies.

All and any financial adviser can give broad advice about your entire financial situation, but the thing is they typically specialise in one specific area.

Encouraging good money habits

Being rich isn’t a condition of meeting a financial adviser.

If you are one of those people who clean your house before the cleaner arrives, don’t apply the same principle to a good adviser who specialises in budgeting.

EnableMe is a nationwide business designed to specifically help people get better with money through budgeting. Founder Hannah McQueen started the business at 27 after she personally found it difficult to get ahead financially despite earning a good income. She used her Masters in Taxation Law to patent a formula for paying off a mortgage faster.

EnableMe helps clients with good money habits to budget and grow wealth as well as mortgages and insurance, and this applies at all ends of the financial spectrum.

Similarly, Lisa Dodson, of Acumen, uses her experience in the industry by offering herself to clients as a “financial sounding board” for general advice before referring to a more specialised business.

Co-creating a plan for your future

Property has what other investment options don’t – leverage.

Investors can buy a high-priced asset with zero cash upfront. In doing so they generate substantial returns, and they get to keep all the profits.

But if it were that easy, everyone would do it.

A specialised property investment company will have financial advisers on staff to help co-create a financial plan for your future, before matching that plan to properties.

The big names in New Zealand are Propellor, Opes Partners, iFindProperty and Positive Real Estate.

When investors work with Opes Partners they are assigned a Property Partner who is also a qualified financial adviser. Together, they use in-house software to create a property investment strategy, running cash flow analysis on potential properties 15 years into the future.

Once the final choice has been made, the investor is then guided through the process of actually purchasing the property.

Or there’s Twine Financial Advisers. Director Eugene Bartsaikin says his business’ point of difference is that they are “property strategists”.

This means the team details the ins-and-outs with investors, getting a game plan in place before making any purchase decisions. After this process is finished Eugene refers his clients to other professionals.

Funds, shares and investments

Not all investing is property investment. Another popular option is investing in shares and managed funds.

A share is when you buy a small part of a specific company. A fund is where you put your money into a big pot with other investors and money is invested on your behalf.

Managed funds are great for emerging investors because you can invest in everything all at once: shares; term deposits; and property (although usually commercial property).

Some of the big names are: Milford, Craigs Investment Partners, Fisher Funds and NZ Funds.

The latter, NZ Funds, currently manages around $2.1 billion of investments for Kiwis in New Zealand and overseas, helping to manage funds and KiwiSaver.

There is also the option to work with a private financial adviser for one of the mainstream banks. The catch here is they only work with high net worth clients. So, you’ll need at least $1 million to work in these circles.

Your link to the bank

Probably the most familiar financial advisers (although not always known as such) are mortgage advisers.

These are companies like Squirrel, Loan Market and NZ Home Loans – all mortgage broking firms that have financial advisers who specialise in mortgages.

These financial advisers are there to help get your mortgage approved, and then structure it correctly.

A mortgage broker is your link to the bank. They are the person who is going to take all your documents (e.g. pay slips, bank statements) and dress your mortgage application up to give it the best chance of obtaining a loan.

Could you submit your application to the bank yourself? Sure, you could. But often you’ll have a better shot at success (or more money) if you go with a broker. They have a lot more behind-the-scenes knowledge and insider secrets that could help you.

And don’t look at them sideways if they advise you against buying a new car or having a baby in the short term. Their end game is making sure you can get the money to buy the house when you want it.

The vital role of insurance

Insurance advisers often slip under the financial adviser radar. For companies think names like Axico and Apex, but many mortgage advice companies will also have insurance advisers.

This is where the line is drawn between an insurance broker and a direct insurer – direct insurers are “order takers” and don’t give advice. Insurance brokers go much more in-depth for your personal situation.

The cost of insurance in New Zealand is situation dependent, meaning the same house in a different city or section can be thousands more.

It’s all based on risk. What’s $1800 to insure in Christchurch could be $1100 to insure in Auckland.

This is because all policies contain different wording and will insure you for different risks. Therefore, all premiums are differently priced.

One word of warning: No-one can just “label” themselves with the title of financial adviser without being licensed by the Financial Markets Authority.

Make sure you check the Companies Office and disclosure statements. A good Google search never goes amiss either.

But just because someone has met the legal requirements to be a financial adviser doesn’t automatically mean they give good advice.

This is why it can be a good idea to get a recommendation.

Informed Investor's content comes from sources that Informed Investor magazine considers accurate, but we do not guarantee its accuracy. Charts in Informed Investor are visually indicative, not exact. The content of Informed Investor is intended as general information only, and you use it at your own risk.


Related Articles