What is an ‘Independent’ Adviser, and why you might care.
When it comes to your future, having the right advice can make all the difference. But does it matter whether your financial adviser is independent? The answer is an unequivocal, resounding, 100% yes.
In New Zealand, independent financial advisers can offer several advantages, particularly if you're looking for personalised advice that considers your whole financial picture.
Here are six (and a half) reasons why independence might matter to you.
1. Advice That's Focused on You
Independent financial advisers are generally not tied to a particular bank, platform, or investment provider. This provides greater flexibility to recommend solutions based on your circumstances, rather than being restricted to one company's products.
Whether you're planning for retirement, managing a portfolio or reviewing your KiwiSaver, the focus should be on what works for you as the end all, and be all.
2. More Investment Choices
Different investments serve different purposes.
An independent adviser may have access to a broader range of investment options, including managed funds, exchange-traded funds (ETFs) and other investment solutions.
This flexibility can help create a portfolio that reflects your goals, preferences, values, comfort with risk, and circumstances.
3. Prioritizing Your Lifestyle
Good financial advice isn't just about choosing investments or chasing returns.
We believe it's about starting with the person's priorities and the kind of life that they want to live. For example, how you spend your time, what you’re doing, and what you find meaningful are the main pillars.
From there, add in goals and make sure that plans are structured around your priorities.
You will likely never get a lifestyle financial planner from somebody that's biased and not working for an independent company.
This video explains how Lifestyle Financial Planning works
4. A More Personal Relationship
Financial planning isn't a one-off exercise. So many things about your life will change over time.
Smaller independent advice businesses may offer a more personal relationship, giving you direct access to an adviser who understands you but just as importantly, continues to work with you over years and decades.
It's troubling to start over in a new relationship every couple of years, but working with the same person for a long time is a better recipe for success.
5. Greater Transparency and Understanding
Understanding what you're paying for financial advice is important.
Independent advisers will typically charge fees. This is different from a commission as commission happen behind the scenes and clients don’t get to see how much, how often, or when an adviser gets paid.
A fee is an agreement between a client and an adviser, every fee payment is transparent and known.
A good adviser should clearly explain their fees, how they're paid and any potential conflicts, so you can make an informed decision.
6. Local and Accessible Services
Independent financial advisers often provide local and accessible services, operating close by, that make face to face meetings easier.
Smaller practices allow advisers to focus on personalized service, with fewer clients and more time for regular communication and client engagement.
What About Americans Living in New Zealand?
For US citizens and expats living in New Zealand, financial planning can be particularly complicated.
You may have investments, retirement accounts or income in both countries. US tax obligations, New Zealand tax rules, currency considerations and different retirement systems can all influence your financial decisions. Big box brokerages generally won’t understand enough to do this effectively for you.
An independent financial adviser with experience working with US expats should be better positioned to consider your wider financial circumstances and coordinate with appropriately qualified US and NZ tax specialists.
(Here's a link to how we work with Americans)
The Bottom Line
Independence sounds like an nonsense-word that doesn't matter until you see how poor biased advice looks in comparison.
It really comes down to reducing an adviser's conflicts of interest. A conflict of interest will always exist, but reducing it to the most minimal amount gives clients more benefit.
Independence can provide greater flexibility, but the real value comes from the quality of the advice, the relationship you build and having a financial plan designed around your life.
Comments