Financial planner or financial counsellor. Which do you need, and when?

Are you confused about the contrasting roles a financial planner and a financial counsellor play in providing advice? With the use of a descriptive case study, this article explains the differences between the two professions and how each can provide valuable assistance in a range of financial situations.

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.

It was only when she stayed the night at his house that 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 twelve months earlier he had driven into a Mercedes. 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 was struggling to even pay his rent. Sally also felt at a loss and for the first time, John and Sally argued quite bitterly over the situation.

Finding a financial counsellor

Fortunately, Sally discovered the National Debt Helpline, a free service in Australia which links you to financial counsellors in your state. Within days, John had met with a financial counsellor, and together they worked through his debt situation, including who he owed money to and what his legal obligations were regarding those debts. The counsellor wrote on John’s behalf to every debtor, including the owner of the Mercedes, and negotiated a repayment plan. In some cases, this involved a short pause in the loan repayments, 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 candle-lit dinners at home and long lazy picnics. It was on one of those picnics that John proposed.

Finding a financial planner

At tax time, Sally mentioned the upcoming wedding to her accountant as well as 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, saying they had already met with a financial counsellor, but her accountant explained a financial planner was a different adviser. One who could help map out their financial future and help avoid the mistakes of the past.

The financial planner encouraged John and Sally to talk openly about their attitude to money and their financial goals. Once appointed, the financial planner drafted a Statement of Advice, or a financial roadmap, 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 ensuring they have a plan in place to enable them to pay for expenses like their car insurance.

Whether you are looking for a financial counsellor or a financial planner, help is just a call away.

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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