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Financial planner or Financial counsellor ?

Written and accurate as at: Sep 08, 2021 Current Stats & Facts

When Sally met John, she knew it was a match made in heaven. She noticed he always paid in cash, which he said he did because he didn’t like credit cards - a sign of good financial habits, she thought.

Only when she stayed the night at his house, she noticed the unopened mail and realised something was wrong. It was a difficult conversation. John was at first evasive, then defensive, then angry and then in tears.

His finances were a mess, and he didn’t know where to begin or how to fix them.

Fortunately, he had a secure, well-paying job, but he had driven into a Mercedes twelve months earlier. No one was hurt, but he was liable for the expensive repairs to the other car, and that’s when everything quickly spiralled out of control.

He didn’t have insurance or the cash to pay for the repairs. He needed his own car to go to work, so he maxed out his credit cards to pay for those repairs, and he was being pursued to pay for the repairs to the Mercedes.

John had always been careful with money, but now he felt lost and struggled even to pay his rent. Sally also felt at a loss, and for the first time, John and Sally argued quite bitterly over the situation.

Fortunately, Sally worked at their local council office, and a colleague pointed out the council offered a free financial counselling service for when things go wrong.

Within days, John met with a counsellor and together, they worked through his entire financial situation, who he owed money to, and his legal obligations regarding those debts.

The counsellor wrote on John’s behalf to every debtor, including the other car owner, and negotiated a repayment plan. In some cases, this involved an interest holiday. In others, a debt reduction. It gave John some much needed financial breathing space.

Sally fully supported John’s efforts to sort out his finances, and for the next twelve months, they had simple candlelit dinners at home and long lazy picnics. It was on one of those picnics that John proposed.

At tax time, Sally mentioned the upcoming wedding to her accountant and her concerns about John’s financial position and whether they would ever be able to buy a home. Her accountant suggested they meet with a financial planner.

Sally declined to say they had already met with a financial counsellor, but her accountant explained a financial planner was a different adviser. One who could map out their financial future and help avoid the mistakes of the past.

At their first meeting, the financial planner encouraged John and Sally to talk openly about their attitude to money and strategies for achieving their lifelong financial goals, including drawing down on their super to buy their first home.

The financial planner drafted a Statement of Advice, or a financial roadmap for the next five years, which helped John and Sally see a future together, based on mutual financial security and shared financial goals.

It also included an outline of the insurance they should each have, particularly personal insurance such as life insurance and income protection, as well as a schedule for making sure they had car insurance in place.

Something John now says he will never forget.

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