Financial Planning Step 2 – Research & Investigation



Your adviser must meet a number of minimum standards to come to the point where an appropriate Statement of Advice can be prepared and submitted for your consideration. The level of research undertaken will depend up on the scope of advice that you require.

This will usually involve obtaining information or copies of documents on:

  • Assets and liabilities
  • Account statements
  • Investments
  • Superannuation
  • Life insurance
  • Income protection
  • Tax assessment notices
  • Payslips or income statements
  • and details of your expenditure.

Your adviser and their administration support team will check and consult with you until our records correctly reflect your current position, expectations and requirements for advice.

These processes can take some time, which is why your adviser will often ask for your authority to deal directly with your professional advisers or the institutions that hold your accounts, as this is often more efficient for you.

Your adviser will consider which, if any, strategies may assist you and if so, suitable products that meet your requirements. They will use their knowledge, experience and training to filter the products available to you. in many cases, this will involve further liaison with yourself for institutions to clarify specific points or detail.


What if I don’t want to provide the detail requested?

You are not required to provide the information that is asked for. However, if you do not then your adviser may inform you that they are unable to provide you with answers that would be suitable to you. Alternatively, if you proceed without providing all the relevant material linked to the advice being provided then if the advice turns out to be wrong or inappropriate, you will have limited redress against your adviser.


Goals and Objectives

It is our experience that many people do not have specific goals or financial aims, and this can be a key component of any initial investigation. Your adviser may need to make calculations or find detail for you before you are in a position to be specific about particular financial goals. This is especially the case with retirement planning – in many cases the preferred retirement income may not be known, requiring discussion or budget calculations before any investment investigations take place.


Financial Modelling and Sensitivity Analysis

What if? It’s a key component of any risk management assessment when looking at your financial planning goals and objectives. It’s one thing to work out a likely suitable portfolio but quite another to gauge the range of likely outcomes under different scenarios. We use financial modelling to look at likely outcomes of following your current course, and how various strategies or changes would impact on those outcomes.



How do we select strategies, investments or insurances?

Financial planning research is both a science and art. There are a range of facts that are concrete and testable but coming to an appropriate recommendation is rarely a simple matter of lining up a list of facts. The simplicity of bringing together accounts and strategies towards clear objectives is shaded by the vagaries of an uncertain future, whether that be volatile investment markets, changing laws and political objectives or changes in your own situation. There is rarely a single “best” option in financial planning. More usually, there is a need to balance priorities, and consider a list of pro’s and con’s for each strategy or account.

In the area of superannuation for instance, the appropriate strategy may involve:

  • Selecting a low-cost fund
  • Identifying a fund providing effective insurance options
  • Setting up a self-managed super fund
  • Looking at trading strategies versus long term strategic asset allocation
  • Preparing for the future investment options when balances increase
  • Identifying a mix of strategies for a couple that meet a similar end result while catering for different investment outlooks and approaches to risk
  • A focus on estate planning priorities for children and beneficiaries.

When looking at an appropriate strategy or product from a cost perspective, the investigations may involve:

  • Balancing cost with services such as online access or online transaction capabilities
  • Identifying appropriate reporting avenues
  • Interpreting costs for passive or more active investment styles.
  • Establishing the total cost of alternative strategies – which includes both up-front and ongoing costs
  • The interaction of your self-directed activities and the processes you wish your adviser to be involved with or to take responsibility for
  • The suitability for long term objectives in a volatile world – this was shown to be particularly important in the period following the Global Financial Crisis, as institutions closed down less profitable accounts and policies.


The final decision is of course yours, so your adviser’s research aim is to sort through the data and noise to identify relevant information and options. They will then analyse those research finding to help facilitate your decision making process.

Where appropriate, products and strategies are also screened for relevance to our Wealth Pyramid financial planning approach. This in-house concept helps prioritise planning objectives, and leaves room for the Australian tradition of “do-it-yourself” involvement within a robust process for portfolio construction.


Product Comparisons

If you are looking at various superannuation funds then a comparison would require considering a wide range of variables that differentiate super accounts. Fees, investment options, statements, reporting, insurance, contribution limitations, legislative impacts and a range of other points could come into a fund comparison. There is no such thing as the “best super fund”. Rather, there are a host of benefits and features that need to be balanced against any limitations or drawbacks when seeking to rank super accounts and providers.

Insurance comparisons can be very difficult, requiring a balancing of health issues, occupation rankings, income or beneficiary priorities that will determine whether suitable insurance cover can be found and arranged. Policy terms and conditions need to be balanced against more mundane features such as payment options, insurer financial strength and the capacity to allow change as circumstances alter.



It’s one thing to come up with a range of alternatives that may be suitable to meet a financial objective – but at what cost? While not always the over-riding consideration, costs are an important part of any recommendation. There are a number of ways in which costs can impact strategies, and the financial planner will look at these to identify whether any of the options are more suitable than others.


A special note on insurances

Life insurance, total and permanent disablement cover, income protection and trauma or critical illness cover are all specialised areas of advice, so it is appropriate to highlight where these an impact and how we assist you through this process.

It is also the case that the effort and cost to research an appropriate product, submit and application and ensure progress to an in-force policy will often be disproportionate to the cover being applied for.

Insurance companies generally pay a commission to the adviser who submits the application. The commission will be based on a percentage of the annual premium for any policy being sought. All commission we receive will be disclosed to you.

Insurance can be a very time consuming area of advice, and unlike more standard financial planning, it is very difficult to predict in advance just what costs are likely to be incurred in obtaining your desired outcome.

It is our experience that commission remains the most appropriate remuneration model for insurance related advice. In effect, the adviser takes on the risk that the remuneration will not reflect the work involved. However, this allows the focus to remain on getting the cover in place – rather than worrying about the size of a potential bill once the job is done.


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