Financial Education

Financial Literacy

We continue to hear a lot about inadequate financial advice in the media, much of what is being said needs to be said. But how do we fix the problem of investors not understanding the advice provided and, as a result, just going along with what has been recommended?

The answer is for the investor to take some of the responsibility for understanding advice that is provided and for agreeing to recommendations made. This in turn, means the Adviser needs to make sure the client understands fully the advice provided.

How can the Adviser ensure the client fully comprehends the advice and the outcome of implementing advice? I believe this can only come from providing an education process up front before giving advice. Yes, some clients will need less education than others, some clients are already experienced investors; my job as an Adviser, is to ascertain early on how much the client understands and to fill in the gaps in their knowledge. We do this in a structured way that ensures the client can ask questions and also so the Adviser can assess whether the responses are understood. Other advisers offer education via Webinars and YouTube presentations, these work just as well. Importantly, the client needs to understand the language used in any written or verbal advice. This education step is only the beginning of the client/Adviser investment journey with the education continuing through their ongoing relationship

As a client, you need to say when you do not understand any advice given or recommendations made because, if this is the case, you the client, cannot give informed consent for the implementation of that advice.

You need to feel comfortable enough with your Adviser to say, “can you please explain that advice in a way I can understand.

Remember it is your money, your financial journey and your lifestyle goals that you wish to achieve.

There are some very good basic texts written that assist beginners, I can only recommend that you take control of your own financial journey. You may be too busy or too unsure of your knowledge to build a portfolio on your own, or to watch the markets and know when to make changes, but that does not mean you step back. Asking for some education about investing is just the first step: the engagement you have with your adviser should be one where you work together to achieve your goals.

For me as an Adviser, this is a shared responsibility between me and my client. I need to recognise where the client’s money has come from, how hard it has been to set aside funds to invest, I need to ascertain what knowledge my client has about investing, the risks of investing, the language of investing and I need to fill any gaps in my clients’ knowledge about investing, before providing advice.

You will be surprised how empowering this journey can be for the client and how their growing knowledge will flow across to managing other facets of their financial affairs such as; managing debt, asset protection, budgeting etc.

 Eleanor Dartnall (AR 285743), & Dartnall Advisers Pty Ltd (AR 299568) are Authorised Representatives of Magnitude Group Pty Ltd • ABN 54 086 266 202 • AFSL 221557 • 

General Advice Disclaimer: This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.