8 minute read
What does “good advice” look like?
Angela Chu*
Why some current systems may not work
The traditional financial advice model has been around for decades, but it is no longer effective in today's world. Many people are still struggling with their finances despite seeking help from financial advisors. The reason for this is that the current systems may not work as they are too focused on selling products and services rather than helping people achieve their financial goals.
One of the major problems with the current system is that financial advisors are often motivated by commissions. This means that they may recommend products or services that are not necessarily in their clients’ best interests, but rather what will earn them the most money. This conflict of interest can lead to a lack of trust between clients and advisors, which can ultimately harm the client's financial well-being.
Some current systems rely heavily on outdated technology and processes, which can make it difficult for advisors to provide personalised advice to clients. As a result, many people may feel they are not getting the attention or support they need to achieve their financial goals.
It's time for a change in how we approach financial advice. We need a system that prioritises the needs and goals of clients over anything else.
So, how can you make good financial decisions?
When it comes to achieving financial success, it all starts with defining your values and setting clear goals. Your values will serve as the foundation for your financial decisions and guide you towards making choices that align with your priorities. Once you have a clear understanding of what matters most to you, it's time to set achievable goals that will help you reach your desired financial outcomes.
Setting financial goals doesn't have to be a daunting task filled with complex technicalities. Simply having an idea of what you want to achieve financially is a great starting point. Whether it's saving for a down payment on a house, paying off debt, or building a retirement fund, having specific targets in mind will help keep you motivated and focused on taking the necessary steps towards achieving them.
Finding your "Why" is crucial when it comes to making wise financial decisions. It's the driving force that gives you a strong sense of purpose and motivation to save and invest for the long run. Without a clear understanding of your "Why" it can be challenging to stick to a financial plan, especially when obstacles arise. Whatever your “Why” may be, having a clear sense of purpose will help you make smarter financial choices that align with your goals. So, take some time to reflect on what drives you and find your "Why" - it could make all the difference in achieving financial success.
Once you have your values and goals set, come up with a plan and invest accordingly. Planning plays a crucial part in this process. You'll need to formulate a plan of how you can achieve those goals. If you do this properly, you will have a strong understanding of where you are now and exactly where you are heading.
...and that’s it! Putting all the above on repeat will help you make good financial decisions for your goals over the long run.
However, in reality it’s not that easy…
Planning for the future is never an easy task. As much as we would like to have a clear and straightforward path towards our goals, life has a way of throwing curveballs that can disrupt even the most well-thought-out plans. From changes in personal circumstances to shifts in economic and political landscapes, there are countless factors that can impact our financial planning journey.
One of the biggest challenges in financial planning is dealing with change. Investment markets fluctuate, tax laws evolve, and our own attitudes towards risk can shift over time. This means, what worked for us yesterday may not be the best approach for tomorrow.
In other words, we are human, and our lives cannot be simply placed in a generic algorithm to achieve long-term goals. Unfortunately for us, life happens.
Then what does “good advice” look like?
Well, that’s where The Private Office comes in. We believe we have the perfect model in place to help work with our clients to achieve their long-term goals. Here’s how we do things differently.
There are three fundamental areas to our role, and they're all important. Planning, advice, and relationship. They're all interlinked, and you are at the centre of all of them.
When it comes to achieving your financial objectives and goals, planning is the essential first step. It's about identifying where you are now, what you want to achieve, and creating a roadmap for how you're going to get there. At The Private Office, we understand that each client’s situation is unique, which is why we work closely with you to develop a personalised plan that addresses your specific needs and goals.
Our approach involves looking at your entire financial situation to gain a comprehensive understanding of where you stand. We then work collaboratively with you to create a plan that considers your current circumstances as well as any future changes or opportunities.
By working together on this planning stage, we can help ensure that you have a clear path towards achieving your financial objectives. Our goal is to help you make informed decisions about how best to allocate your resources to achieve the outcomes that matter most to you.
Doing this planning bit with you makes the advice bit much simpler. Our team takes the time to carefully evaluate your risk profile and determine what level of risk is necessary to achieve the returns you desire. When investment is needed, we research and analyse investment managers that follow a low-cost, diversified, evidencebased investment philosophy to manage money.
Ultimately, our goal is to simplify the advice process by empowering you with knowledge and understanding. We believe that by working together, we can create a plan and provide advice to take that step towards your goal.
The third and last bit is relationship. As mentioned above, investment markets change, tax rules change, legislations changes. Not only this, over the years your plans, goals and situation will change. By keeping a strong relationship and by keeping each other updated, we can ensure your money is always working towards achieving your plans.
We will make adjustments with these changes (to the plan, to the investments) but by keeping things under regular review we can ensure you remain on track to achieving your goals. The only risk a financial adviser should expose to their clients to is that of not achieving their financial objectives. All the rest is just noise.
We like to meet with our clients at least every 12 months to review their situation and goals, but most importantly to make sure you are on the right track.
Evidence-Based Investing
At The Private Office, we believe in evidence-based investing. This means we make decisions based on what has worked in the past. We don't try to time the market or guess which stocks will go up or down. Instead, we focus on investing in undervalued stocks that have a history of performing well over the long term.
Evidence-based investing is a proven way to build wealth over time. It's not a get-rich-quick scheme, but it is a reliable way to achieve your financial goals.
The key benefits of evidence-based investing include:
• More reliable than trying to time the market.
• Less risky than stock-picking.
• More cost-effective.
If you're looking for a way to invest your money that is based on sound market research and proven methods, then evidence-based investing is a good option for you. If you would like to enhance your investment experience and increase the likelihood of achieving your long-term financial aspirations, please feel free to get in touch with the team at The Private Office.
A disclosure statement is available on request and free of charge.
Angela is a Client Director at The Private Office. She has spent nine years in the Finance and Banking industry of which she has spent eight years focusing on providing investment advice to high-net-worth clients and trusts.
Angela studied mathematics at University at the age of 15 and has a passion for crunching numbers and looking at data.
Angela was born and raised in New Zealand, and she often travels to Christchurch where she is originally from to visit friends and family.
