If there is something you don’t understand about your finances, or something you wish to change, you might well turn to an accountant or a Financial Planner (aka a Financial Advisor), as these are seen as our society’s financial oracles.
The only problem with this approach is that the solutions they give you will have a narrow focus – reflecting their respective areas of expertise.
Accountants are tax minimisers.
Financial Planners are product specialists in the areas of investments (including superannuation) and insurance.
So the solutions you get from them will be based on tax, investments or insurance. Which is too bad if, for example, you have overextended yourself on your home loan and find yourself with rapidly growing credit card debt as a result.
Or if you are a high-earning, high-spending couple with zero savings to show for all your hard work.
Or if your feast-and-famine personal financial situation mirrors your roller-coaster business income.
Or if your bank has told you that you can afford to buy an investment property, but you don’t know whether to believe them.
And so the list goes on.
These situations reflect the missing piece in our financial society. They are very real challenges, but they are usually not best solved by the core professional competence of either an accountant or a financial planner.
Planning finances in the true sense of the words (as opposed to selling you an investment or insurance product) is professional know-how that many people are looking for, but which – in our apparently sophisticated economy – is not readily available.
The ability to draw up a plan which will address your challenges, show you how to stick to that plan, and tell you what future (in terms of your bank account balance for years to come) the plan will lead to is a skill which is quite distinct from tax minimisation or financial product knowledge. But one which is at least as – if not more – relevant and empowering.
So next time you are looking to address a financial situation which does not involve tax, investments or insurance, think hard about what type of financial professional you approach. Because the area of expertise which you avail yourself of will have a direct bearing on the success or otherwise of your financial future.