A roadmap before investment journey

Share

There are now more automated investment providers on the market than ever, targeting the 80% of Australians who are not seeking advice from financial planners. While a good tool to have for first time investors, most of these ‘robo-advisors’ tend to fail at taking into account the bigger picture of a client’s financial situation, for instance, if one has lifestyle debts.

A sensible thing to do first then, before embarking an investment journey (or any journey for that matter), is to develop a roadmap including where you are now and where you are heading.

"Until you’ve got the complete context around someone’s situation, you can’t even get close to acting in their best interests because you don’t know their situation … they [robo-advice platforms] are great tools for getting people to start thinking about savings and investing, but should they [clients] be doing that right now? " as Map My Plan founder Paul Feeney explains to financialobserver (read full article here).

He argued it was important to first help clients develop a roadmap of their ability to manage their finances – a metric Map My Plan refers to as the “financial fitness index” (take your own financial fitness test here) – to help them adequately determine investment objectives, prepare for unexpected life events and educate them about the importance of savings along the way.

"At its core, financial planning is about capital allocation; it’s about where do [clients] allocate their lump sum capital or surplus monthly capital to make sure they can lead the life they want with the goals, dreams and aspirations that they’ve got.” he said.

So the bottom line is, automated investment providers are unlikely to close the advice gap in Australia’s broader population, until they start to adequately engage and educate clients, on the simple principles like paying off your debt, before start considering investments.


Gen Y housing affordability concerns can be ignored for only so long

Late last week the Turnbull Government-dominated Parliamentary Economics Committee released its report on housing affordability. Rather than reforming negative gearing or other demand side drivers, the Report suggests the housing affordability proble

read more >

2016 Financial Fitness Report

Personal finance issues are the leading cause of stress in Australia, and financial wellbeing is recognised as an integral part of overall wellbeing. Yet, to date, very little research has been done in Australia to measure the state of our financial

read more >

What’s the new story with super?

Its been said there are two certainties in life: death and taxes. The government's federal budget introduces a third: changes to super

read more >

Time for a rich list reality check

The web is full of blogs and articles telling you how to get rich through the stock market. Investor strategies, new apps to invest your spare change, online investment platforms...

read more >

Financial advice needs a client-first crusader

Currently, the [financial planning] industry is over-servicing the fortunate 20% while almost completely neglecting the 80%. Wealthy people get wealthier while the average Joe doesn’t have access to the advice and tools needed to advance

read more >