On Board today is Dee – a not-for-profit financial advisor with over a decade of industry experience, and 7 years of tertiary study and numerous financial qualifications behind her. In this episode, we unpack exactly what a financial advisor is, how they might be able to help you, and what the best way to use them is.
Dee has a pretty inspirational story: She is an incredibly hard worker and was the first person in her family to graduate University (and even graduated debt free!). She has helped thousands of her clients work towards reaching their financial goals, and balances this with her partner as they raise their family and journey towards FIRE together.
“Millennial Mum & Financial Adviser, I Help Women & Families with Money, and Share my own FIRE journey”Dee from BudgetBossBabies
Introduction to Financial Advisors
An important lesson us Pilots all learn in ground school is the value of having an experienced flying instructor. They guide, shape and mentor us as we learn to fly and eventually gain our wings.
Well similarly, A financial advisor or financial planner is a professional who can help you learn to manage your finances like a pro. They can also help with estate planning and your overall financial strategy. They should work with you to comprehensively determine your personal financial situation, needs, challenges, behaviors and your future goals, as well as regularly check back in with you to make sure you are on track.
Financial Advisors actually have to deal with some pretty impressive (and increasing) levels of regulation, and are bound in Australia by a legal obligation to act in your best interests. Having said that – they are not all the same. There are still some massive sharks in this industry, as well terrible financial products that you need to be aware of and that you probably want to avoid.
So, do I have a Financial Advisor, do you need one to reach Financial Independence, and what are some of the common pitfalls when it comes to financial Advisors?
I managed to track down an experienced, Not-for-profit financial advisor for a bit of a Q and A and got to ask pointed questions on the topic.
Dee is a not-for-profit financial advisor with over a decade of industry experience. She has over 7 years of study behind her, having earned a degree in finance and multiple financial advisor qualifications including a Diploma, Advanced Diploma and Certification in Financial Planning – among many other industry specific, technical and regulatory qualifications.
Dee deliberately made a pivot away from a higher workload and higher stress job, shifting into the not-for-profit sector to help design a more sustainable lifestyle.
She mainly works with women and families to help get them on track to reach their financial goals – whether that is paying off debt, buying a family home, building wealth or literally just keeping their heads above water. Dee’s partner also works in the not-for-profit field, and together they are raising a family and investing their way towards FIRE.
Dee is no stranger to hard work. She initially earning $3 per hour in the families fish shop, and went on to be the first in her family to graduate university – even doing so debt free! She now balances the life changing work she does with ongoing professional development and being a Mum to two young children.
So without further adue lets get into it and unpack everything you need to know about Financial Advisors…
Financial Advisors with Dee
- Check out the article ‘Do I need a financial Advisor‘ where Dee and I go into a bit more detail in the interview
- Australian Association of Financial Advisors
- Services Australia Website for informaton on Financial Advice, Parenting payments and Childcare.
- ASIC’s MoneySmart Financial Advisor registry – Database to cross check any potential financial advisors
- Australian Tax Office Medicare Levy Surcharge – regarding Private health insurance
- Check out Dee on Instagram @budgetbossbabies.
Dee’s Top Financial Advisor tips
1. Maintain a basic budget – Spend less than you earn!
2. Invest in yourself – Your health and education and invaluable and will return you much higher yield than any investment
3. Avoid lifestyle creep – Once established in terms of lifestyle assets, don’t be tempted into buying bigger houses, newer cars and flashier toys; instead focus on growing investment assets to help you create assets to generate you income to then allow you to meet your lifestyle and financial goals.
Dee’s Top Books and Podcasts
- The Wife Dought by Annabel Crabb
- The mother of all jobs by Christine Armstrong
- Fair Play by Eve Rodsky
- The Life Plan by Shannah Kennedy
- Atomic Habits by James Clear
- Podcast: Women at Work by Samantha Sutherland
- Future Women by Jamila Rizvi
- Equity Mates
- My Millennial Money
- Financial Autonomy
Captain FI 0:07
Ladies and gentlemen, this is your captain speaking. Welcome aboard Captain FI the Financial Independence Podcast.
Good day, welcome to an episode of Captain FI, the Financial Independence Podcast where I open the copy to some of the best and brightest in personal finance, as well as those who have reached or are on their way to financial independence. Before we get started today, remember anything on the show is provided for general information only, and should not be taken as constituting a professional advice, you should always do your own research when making any financial decision. An important lesson all of us pilots learn in ground school is the value of having an experienced flying instructor. They guide, shape and mentor us as we learn to fly, build our confidence and eventually go solo. Even once we gain our wings, we still check back in regularly for ongoing advice and training. Well, similarly, a financial advisor, or financial planner is a professional who can help you learn to manage your finances like a pro. They can also help with estate planning, and overall financial strategies. They should work with you to comprehensively determine your personal financial situation needs, challenges, behaviors, and future goals. As well as regularly check back in with you to make sure you are on track. Financial Advisors actually have to deal with some pretty impressive and ever increasing levels of regulation. They are bound in Australia by a legal obligation to act in your best interests. Having said that, they are not all the same. There are still some massive sharks in the industry, as well as terrible financial products out there that you should be aware of and probably one to avoid. So, do I have a financial advisor? Do you even need one to reach financial independence? And what are some of the common pitfalls when it comes to choosing one? Well, I managed to track down and experience not for profit financial advisor for a bit of a q&a and I got to ask some pointed questions on this topic. De is a not for profit financial advisor with over a decade of industry experience. She has had over seven years of tertiary study behind her having earned not only a degree in finance, but multiple financial advisor qualifications, including a diploma, advanced diploma and certification in financial planning, amongst many, many more industry specific technical and regulatory qualifications. DEA made a deliberate pivot away from a higher workload and higher stress job shifting into the not for profit sector to help her design a more sustainable lifestyle. She now mainly works with women and families to help get them back on track and reach their financial goals. Whether that is paying off debt, buying a family home, building wealth, or even literally just keeping their heads above water. Ds partner also works in the not for profit field. And together they are raising their family and investing their way towards fire. Now Dee is no stranger to hard work. She was initially earning $3 an hour in her family’s fish shop and went on to be the very first in her family to graduate University. And she even did so debt free. She now balances her life changing work with ongoing professional development. And of course being a mom to young children. Without further ado, let’s get into it and unpack everything you need to know about financial advisors. Alright, morning Dee, how you going?
Good. Thanks. Thanks for having me on the show.
Captain FI 4:44
No problems I hear it’s been a bit of a rough night and morning with the kids but you’ve got a coffee with you so it should make for a fun recording.
Yes, that’s right. Hopefully it kicks in pretty soon.
Captain FI 4:58
Sorry, I’ve got my I’ve got my cup of See here. I’m personally trying to wean myself a bit off the the caffeine. Because I’m a bit I get a bit jittery. But no, I am definitely craving one as well.
Captain FI 5:09
so Dee, can you give us a bit of a background on yourself?
Yes, I’m the voice behind budget boss babies Instagram account. And I’m a financial planner. I’ve been a financial planner for eight years and working in the financial services industry for 11 years now. So pretty much my whole professional career has been in financial services. I’m in my early 30s, I’m married, I’ve got two children. So they’re quite young, still a three year old and a 10 month, or nearly 11 month old. So about my background, I’m from a big fat Greek family, not quite as big as your family by the sounds of it. But I’m the eldest of five children, and my family, our family or fishmongers, and to been business owners my entire life. Both my parents never went to school, or never finished high school, I should say. So they dropped out in grade nine and grade 10. You know, they never sat me down to show me how to budget or how do we invest? We often spoke about business economic topics around the dinner table every night, which was pretty cool. The biggest thing I guess I learned from them is that, you know, you don’t need to have all these degrees and qualifications to be successful in life, you can, you know, work hard. And as long as you love what you do and passionate about it, then you can Yeah, be successful.
Captain FI 6:34
I love that. You’ve had exposure, I guess, to the business side of house, from a young age. And I think that’s probably been a really powerful influence on you and how you have become so successful in the financial industry.
Yeah, definitely. And I think it’s also really helped me relate to a lot of clients I’ve dealt with in the past, because I have dealt with a lot of small business owners as well. So having that background has been very beneficial. And, yeah, I guess the work ethic I’ve been taught, so my first job was working in one of the seafood businesses when I was 11. And I was earning $3 an hour. And I’d work 30 hours between a Friday night and the Sunday, every weekend. So I didn’t really, you know, hang out with friends a lot on the weekends and didn’t go to a lot of parties and things like that in high school. Sorry. Yeah, I had a bit of a different upbringing from that perspective.
Captain FI 7:33
Well, now the I have a bit of a confession to make.
Captain FI 7:37
I am. Possibly Australia’s worst fishermen. So these days, I actually don’t even put a hook on the line. I just tie a sinker to mine. And I was and I was that out? Because I know I’m not gonna catch anything anyway.
Captain FI 7:58
Oh, gosh, no, well, it sounds like you’ve worked incredibly hard, like, cafes, and restaurants, especially family owned can be really tricky. I know. My families previously run small cafes and fish and chip shops. And my my parents or my mom worked in a chicken shop. And she’d certainly tells me how hard it was and getting paid $3 an hour.
That was this when I was 11. And obviously increased as I got older and new learn to negotiate with my father, who is probably the that’s probably the hardest negotiation you’ll ever have to do is with your own parents.
Captain FI 8:39
salutely Absolutely. Because the dad’s the one that’s usually teaching you how to do that. Yeah. ran the good on you for turning it around back on it. That’s fantastic. Yeah,
that was a lot of positives. Like I mean, when I bought my first car when I was 16, I was able to buy that with cash, which not many 16 year olds would be able to do. Unfortunately, I you know, bought a new car because I didn’t know any different really then. And I do not recommend a 16 year old who’s learning to drive to have a new car.
Captain FI 9:13
a recipe for disaster.
Yeah. And then other I guess, things that I’m quite proud of from those earlier years is when I didn’t go to universities, I was I think the first in my broader family to go to university. So when I did that I paid for my university upfront, so I’ve never had any help or hit pics dead. Well, I was quite proud of that. And I didn’t realize what a big deal that is until my later years.
Captain FI 9:40
Congratulations say that that is a huge achievement, especially to be sort of pioneering the way in your family as well. And to walk away with zero hex debt. That’s incredible.
Yeah, thank you.
Captain FI 9:51
I’ve haven’t really had a lot to do with the financial planning industry. I have gone on occasion and spoken into, I guess, a financial advisor or financial planner, can you tell us a little bit about the difference between a financial advisor and a financial planner and what they can do for their clients?
Sure. So the term financial planner and financial advisor are actually the same, they’re interchangeable in Australia. Whereas I think in America, there’s potentially some differences. But in Australia, it’s the same. Same thing. financial coaching, though, so you might hear about money coaches, or something with the name yet coach in it is, is different. So financial advisors and financial planners to use that title, you need to have certain qualifications. In the past, you didn’t have there was no rule sort of benchmark in terms of qualifications. But that’s all changed recently. So there’s now minimum degrees and exams and things like that we need to have passed to be able to use that term. Whereas a financial coach doesn’t have to have any qualifications and but they’re really limited on what they can talk about. So they can really only talk about, you know, budgeting, and that kind of stuff, whereas the financial planner, effectively, they can talk about anything and everything to do with financial advice. So what a financial planner does, I guess, as an overall summary, they help clients set goals, and then work on achieving those goals by making a plan. And the goals can be financial, or non non financial or lifestyle goals as well. Because often those lifestyle goals will still need some sort of financial backing to be able to achieve targets. So that’s sort of a summary of, I guess, what we do. And we can typically give advice around anything from your cash line budgeting, investing, you know, debt management insurance, superannuation and retirement planning, estate planning, just to name a few topic.
Captain FI 12:13
Well, sorry, the the full the full spectrum. Yeah, I’m interested the when I went through engineering school, and when I went through Pilot School, a lot of the stuff I got taught was very different to what I ended up doing in the job. How have you found, I guess, the training or the qualifications to become a financial planner, compared to what you’re actually doing day to day?
Yeah, I 100% agree with you In saying that, I did a degree in finance, not financial planning. Because when I was at university, you know, a decade ago, they didn’t have financial planning as a degree where I went. And so what I studied, finance would be more appropriate if you were to go be a fund manager, for example. So when I was started to work in financial planning, it was more like that personal finance rather than that institutional finance. So it was very different.
Captain FI 13:15
Well, that sounds like you’ve got a fantastic background, for me actually investing and understanding how the stock market and assets work, which is exactly what I would want from my financial advisor.
Yeah, so you definitely learn a lot about the theoretical stuff at university. But I think knowing that stuff like how, you know, theory works is very different to when you’re actually advising somebody in person. Because, yes, you do need to know about maths and know about formulas, and you know, all that kind of technical stuff. But when you’re advising someone, you’re advising a human, and there’s actually a lot of emotion and, you know, behavioral finance behind that. And so, I think a good financial planner needs to have a good mix between those interpersonal skills, as well as that technical background, because there’s no point being knowing all that information if you don’t know how to simplify it, and communicate that to somebody and give them the Why does that matter? Because if they don’t realize why that matters to their situation, they’re not going to care.
Captain FI 14:23
You always got to start with the why. There’s a really good book, I think, Simon Sinek the books called start with what
I mean even yesterday, I saw somebody and unfortunately, so she’s in her 60s. Unfortunately, she had switched her superannuation investments to cash in March, the see March 2020. Dream, the COVID crash, and she now realizes that was a mistake that she got so spooked and switched it and she wanted to, you know, change her investments, but I really had to try and pull her back from that and say We need to look at, you know, what are your goals? What are your objectives, because, you know, there’s no point taking on more risk than necessary to achieve our goals. And we need to consider the broader circumstances, not just your superannuation investments, we need to look at the overall strategy before we start recommending where to invest it. So yeah, it really is looking at that bigger picture of the goals, objectives. And when we are giving financial advice, it’s actually a bit of a process to do that. So the first phase of financial advice involves like a discovery phase, where we need to know about somebody’s overall starting position. So what is their income? What is their expenses? What are their assets, what are their liabilities, as well as those goals and objectives. So really knowing that starting position, and working out those goals and objectives, and sometimes somebody won’t know what their goals are. And it’s sort of our job as financial planners to help refine that with the client. And often we’ll go through different exercises. So on my Instagram I posted before about Maslow’s hierarchy of needs. So I sometimes go through an exercise with somebody around that to help them identify what their, you know, bigger goals are in life. And then, as a financial planner will go away research, you know, what their current products are, what are some alternatives, we’ll put together a financial plan, and then we’ll present that and implemented and then have ongoing reviews at least annually, to make sure that initial plan still makes sense. Because things can change in terms of legislation, investment markets, things can change personally, as well. So income might have changed, they might be taking a work break, they might have, you know, had another child, like anything can change. And so that’s why it’s really important to regularly review those financial plans as well.
Captain FI 16:56
Okay, so and on, it’s almost like an ongoing health check. Or I guess you’d call it a wealth check.
Unknown Speaker 17:01
Yeah, I like that.
Captain FI 17:04
So you do, how do you actually track down a financial adviser?
Yeah, so there’s a few different ways, I guess it depends on the type of advice Nita needed. So you could initially go to your superannuation fund, sometimes they’ll have advisors there. Now most superannuation funds will have an intra fund financial advice offering, which means I can really only give limited advice on kind of superannuation and those type of investments, maybe insurance in that soup or that kind of thing. But usually, that is a very, you know, cost effective way to get advice initially on that sort of area. But if you’re wanting somebody who can give you advice on your overall situation, which is usually what I would recommend, because something you might you might think you only want advice on one area, but you don’t know what you don’t know until you speak to someone who’s kind of qualified to bring up different areas of your situation. So you can find financial advisors through the Financial Planning Association of Australia or the FPA. Or you can find them through the Association of financial advises, which is the IFA, so they are two industry bodies in the financial planning industry, and so I’m a member of the FPA. I’m a certified financial planner CFP. We’ve got lots of acronyms in our industry. And yeah, there’s the FPA has a an app where you can put your information in and kind of like a Tinder for financial advice. It’s the best. Classic, yes, you can actually put in there that you’re looking for advice, and you can be matched with some advisors that might meet your needs in terms of your age, or what you’re looking for advice on so I can give you details to put in the show notes or something like that.
Captain FI 19:07
Yeah, that’d be great. I’ll, um, I’ll put links to both of those two professional bodies. Now, you know, I’m pretty lazy. And so often I just find myself typing things into Google. Yeah. Can you see any issues if people just type in, you know, financial advisor near me or anything like that? No. So
I was going to also say that another great way to find a financial advisor is to have a talk to your friends and family. Because often if you’ve got friends, you’ve probably in a similar life stage or got similar goals or, you know, interests. So if they’ve got somebody that they’re speaking with that they may be a match for you as well. So that could be another option to get that personal referral. And in terms of Google no problems with doing that. I guess. The thing with doing a financial planner near me search though, is a lot of financial planning. can advise Australia wide now, with virtual meetings, you actually don’t need to say someone face to face anymore. I guess that’s going to come down to your personal preference in terms of, you know, communication methods. You know, we can certainly do a whiteboard set up over the internet these days as well and have video cameras and all that sort of stuff. Whatever you do, though, however, you find a financial advisor, you always should check that they aren’t licensed to give financial advice. And the way you can check that is by going through ethics, financial advisor register. So asik is a regulator for financial services. And you can basically put in the financial advisors name into the register, and it will come up with their qualifications, their experience, if they’ve had any breaches or complaints, again, against the advisor. So it will give you all that information. And you just want to make sure that obviously, you’re getting advice from someone who is qualified to do that.
Captain FI 21:07
Well, that’s a fantastic service. I wasn’t aware of that. And all again, link to that in the show notes. But how’s that for a motivation to keep you guys on the straight and narrow?
Captain FI 21:21
So once we found a financial advisor, what kind of questions should we be asking to figure out if they’re if they’re right for us?
Yeah, good question. Um, I think you can ask the financial advisor about their experience and about their qualifications. I think that’s always a good starting point. So you can see how they hold themselves and how they communicate. And maybe also asking about who their typical client is, to see if that you would, you know, suit, suit that advisor style, I guess, because there are some advisors that might focus on millennials, whereas others might focus on retirees, there could be some advisors that focus on high net wealth people. And then there could be advisors that focus on you know, more every day people and have more of a coaching approach in terms of, you know, budgeting and cash flow and those sorts of topics.
Captain FI 22:23
Can we ask the financial advisor, what do they do personally with their money? Is that legit?
Yeah, I actually wrote that down and something to bring up. I do think people are one to ask how the advisor invest and manage their money. So, you know, I’m always pretty open about my situation. But I don’t always think that it really helps the client, because what I do is based on my circumstances, and my needs, and my goals and objectives, and that might not meet the client’s objectives. So, you know, I’ll be very open about it, but it’s not a one size fits all. And, you know, we often have very different needs from that perspective. And the way I always like to think of it is that you can be a surgeon, and not have had a knee operation before. So you don’t have to actually be doing the same things as the client to be able to advise on it, if that makes sense. Yeah,
Captain FI 23:28
well, that’s a that’s a really good analogy, day I, I guess it’s probably a bit cheeky asking that. But it’s a perfect example of how, you know, personal advice really is personal. And general advice is general.
And I’ve written down a few other points just to raise as well around questions to ask a financial advisor. So something that a lot of people may not be aware of is that financial advisors, so they’re obviously licensed to give advice. And they will have what’s called an approved product list. And so what that means is their licensee will give them a list of products that they can recommend without having to, you know, do really extensive research because we use those products all the time. So for example, my approved product list has about 30 different superannuation funds on there, it’s got a list of retail insurance, got investment bonds, it’s got investments outside of superannuation, so it’s got, you know, index funds, managed, actively managed funds, direct equity, so there’s a whole range of things on my approved product list, but you could be meeting with somebody who, you know, you might want to just find out what’s on their approved product list in terms of not the specific products but like the types of products so they might not have any as an example. Retail insurance on there, which means, like, they are not typically giving advice on those sorts of areas, if that kind of makes sense.
Captain FI 25:09
Yeah, no, that does that definitely makes sense.
Um, other areas to maybe question the advisor on is how they get paid. So, you know, are they Infiniti self employed advisor? Or are they employed by a company? So do they make a profit from the fee that they’re charging? Or do they get a salary? Do they get bonuses, commissions from insurance products? You know, in commissions on investments have been banned for a long time now, but there’s still Commission’s on insurance. So yeah, just finding out about how they get paid. I think that’s also worthwhile just to understand their position in the relationship. And also just asking about things like, not only the upfront advice, but I think a lot of people don’t think to ask about ongoing advice. So I mentioned that it is really important to review your situation, at least annually. A lot of people don’t think to ask, well, what’s that going to cost on an ongoing basis? Is that just a one off fee at that point, too? Or is it you know, do you pay throughout the year? or? Yeah, there’s just different ways that you can get paid, and pay an advisor. And there’s no one one way to do it? There’s actually lots of different structures. And yeah, I think it’s just important to understand that.
Captain FI 26:32
Okay, so I guess just on that approved product list, and as you mentioned about the, the payment structure. I guess that segues perfectly into my next question, which was, what are the typical fee structures for a financial advisor,
there is an unfortunately, one way of doing it. There are some advisors that may charge you a percentage base fee based on you know, funds that they’re managing for you, there might be just a fixed fee for the advice. So again, the way I’ve always worked, I’ve never accepted a commission in my life in my eight years of planning experience. And I’ve only ever charged a fee for service, that fee will typically depend on the complexity of the advice that I’m giving. And, and yeah, I guess it really depends on is the advisor giving you holistic advice, where it’s generally more fee for service, or if they’re focusing more on the investments, which sometimes is more percentage base fee, which is not necessarily a bad thing, because it means that their interest is aligned with yours. So they’ll get paid more, if they make you more money. But the portfolio goes down, they’ll have a reduced fee as well. But it does mean that as your wealth is increasing, you’re potentially paying more fees for the advice. And I do think the industry is moving more towards that fee for service side of things. I’ve always said, try and find a fee for service provider. Yeah, but I guess to be fully transparent, though, you could be an advisor that charges a fee for service. But that amount is going to differ, as I mentioned, depending on if it’s a very simple situation, versus something that’s a bit more complex, and also will depend on is the advisor, self employed and therefore making a profit. Or, in my situation, I actually work for a company that’s not for profit. So were more of a cost recovery, in terms of the advice fees that we charge, which is quite unique in the industry. So it’s always going to depend on different factors in terms of how much the fee is and if the advisor is self licensed and independent, versus if they’re employed by a company. And there could be what’s perceived as, like a conflict, almost like a another interest involved. So yeah, it’s just being aware of those different factors.
Captain FI 29:16
Okay, so those are some great questions to ask the next one I was gonna ask, and I guess this is quite related to what you just said. But how do we know that a financial planner is actually acting in our best interests?
Yeah, I guess I have started touching on the head. I think in the past, it was definitely more of a concern around not knowing whether an advisor was acting in your interest or if they were more of a sales person trying to get a commission kind of thing. But I think the industry is, you know, really tidying itself up and moving to be more towards the profession. Like a doctor or a lawyer or an accountant, and especially with those minimum educational requirements and certain exams that need to be passed and things like that. And also with the fee structure being, you know, no investment commissions, and even the insurance Commission’s have reduced substantially as well to prevent conflict from that point of view. So I think moving forward, there’ll be less concern around that. That area, how can we know that advisors working our best interest? Well, first of all, it’s actually legislation now, sorry, we have a code of ethics. And we can’t actually act for a client if there is a conflict of interest. So in the past, an advisor could still act for somebody if there was a conflict, as long as they disclosed it. But these days, you can’t just disclose and disclaim that conflict away, you just simply cannot give advice to that person. So I think things have changed there.
Captain FI 31:06
That’s very reassuring. And so how is the actual how’s it regulated? You mentioned a few professional bodies earlier, and no and also acid. But what happens if a financial advisor does break the conflict of interest?
Yes, so Well, there’s, as I mentioned, the licensee software license to give advice, advice, and there needs to be the like, the person that’s holding the license is often doing audits on your files to determine that. And they’ll often get legal advice externally to give opinions on that, too. So there’s that there’s a seek, as I mentioned earlier, there’s actually a lot of different bodies that regulate the financial services industry. So there’s opera, there’s the A to there’s things like oz tracks. So there’s, we’ve got anti money laundering and counterterrorism acts that we need to abide by, which means we need to identify somebody and understand where their wealth has come from. And it’s not, you know, dodgy money effectively. So we’ve actually got lots of different regulators, that’s just a sump. Some of them there’s a lot more as well. And there’s lots of different legislation, we need to follow, you know, including the Corporations Act, the superannuation industry supervision act, Privacy Act, tax, Agent services access, yet again, lots of different legislation. And to be honest, if I was to go back and do my time again, I would probably go and study more before I became a financial advisor, because I think that would have been very beneficial in this this industry.
Captain FI 32:49
Well, it certainly taking me back to my days of doing a law, aviation trying to get my head through all the different regulations.
Oh, wow. I didn’t even know that was a thing.
Captain FI 33:00
Yeah, it’s just the rules, you know, doesn’t sound anywhere near as complicated as what you had to put up with. Okay, so you’ve got quite a lot of legal regulations, auditing and external, I guess, supervision. As well as if you mock up, you’re going to be publicly named and shamed on the asik website.
Absolutely. And I am subscribed to a number of different finance websites, like they send you updates throughout the day. And we as financial planners regularly and notified when certain advisors are given a black cross against their name. So it’s, you know, sent out to everybody you can’t hide.
Captain FI 33:46
You get ostracized from the group?
Yes, that’s right. Yes, sorry.
Captain FI 33:53
I’ll say D it sounds a little bit stressful. I’m just gonna have to ask, Have you enjoyed your career as a financial advisor?
Yeah, I have. There’s definitely been ups and downs, just like with any job in any career, I think. But overall, I have really enjoyed it, the things that I’ve really enjoyed that I feel like I am making a difference in people’s lives. It’s a real privilege to be invited into somebody’s life and find out about, you know, their biggest dreams and desires, which can sometimes be scary to admit to the world, but then also to find out about those skeletons in the closet and those confessions. Yeah, it’s a big privilege for somebody to trust you with that sort of information and to help them get on the right path. The biggest compliment I get is when a client says they wish they saw me five or 10 years earlier, and I get that, you know, quite regularly that compliment. Yeah, the more people I can reach and help, the more fulfilling I think my life will be but yeah, there have definitely been some lower moments in my career as well, you know, having to help people through really traumatic life events such as, you know, illness and death, that can be quite hard for me to deal with sometimes because I am quite an emotional person. So yes, somehow I managed to keep it quite professional, but then I’ll go home and cry to my husband later that night. And then, as I mentioned earlier, there’s been a lot of changes in this industry. And hopefully, we’ll be able to say it to profession quite soon. But, you know, I’ve always tried to be the most like, qualified I can be. And every time when I think I’m finished my study, and I’m at the top of my game, there’s a change in legislation. And that means I need to do more study or do another exam. That’s been an ongoing thing for the last 10 years, I guess. So yeah, definitely been some more stressful times. But overall, I have really loved what I do, which is why I started my Instagram account,
Captain FI 36:04
lifelong learning, very much in aviation, never a dull moment, and you know, always, always striving to become better and better. So that’s awesome. I think that’s been a really great breakdown about financial advisors. And I mean, it’s been quite valuable for me to listen to that. And I’m sure the listeners will have gotten quite a bit of value out of that. I want to kind of change the tune of ours, our interview today and just ask you a few more personal questions about your individual journey, if that’s okay.
Yeah, absolutely. As I mentioned, I’m pretty much an open book around how I do things. So that’s fine.
Captain FI 36:46
What has your journey towards financial independence? Spain like?
Yeah, so as I mentioned, when I went to university, it was really more like corporate institutional type finance, rather than personal finance I studied. So just like anybody else, I’ve really learned about that personal finance kind of on the job. We’re not like everybody else. But you know, as I’ve gotten older, I’ve learned more things. And then obviously, that was quite accelerated, because of my my day job. So it was quite slow to start with, as I mentioned, there was some silly things I’ve done in the past, such as buying my first car being brand new. Sorry, that was quite silly. But yeah, as time has gone on, you know, really built momentum in terms of growing, you know, my net wealth and things like that. And even with transitional phases, such as taking Korea breaks the children and having the added expense of children. I feel like things are really, I guess snowballing is the term they like to use in the personal finance community. Yeah, so slow to start with, just like how most people probably feel, but then it does. Accelerate as time goes on. Just like anybody else, I think that it was, you know, slow to start with. But then as time goes on, it really accelerates and grows.
Captain FI 38:19
How do you and your partner manage your finances in the household? Do you have your combined Do you use a trust? Or how do you how do you sort it?
Yeah, so my situation is a bit more complex to the average person, because both my husband and myself in high risk occupations in terms of we both give advice. So we do have a family trust. And we try not to have any assets, you know, our name for that protection. But yeah, we do we do joint have joint monies. So we I think we always kind of joined our finances, but we still had our pays going into separate bank accounts. In the earlier years. I’ve been with my husband for 11 years now. Yes, those earlier years, when we first started to live together, we still had our own bank accounts and money going into it. And then we kind of just joined some money into a joint account. But when I was having children and going on career breaks, I didn’t get any paid leave from any employers. So I really had no income for a few months at a time. And so I do find that I actually just don’t know how people would manage their situations if they were in that situation if they had no income and they had separate finances to their partner. So I think in some degree, it is good to kind of join in in some way. Yeah, so we join our money we have most of our assets in a family trust. As a result, we will probably pay more fees He’s in terms of setups and management and probably more tax in our lifetime, because of the way it’s structured, but it is for that asset protection,
Captain FI 40:09
that’s quite a valuable tool to have or structure to have, particularly for high risk occupations, like yourself, advisors, lawyers, surgeons, that kind of that kind of stuff. But what I’m learning is that, you know, for the majority of people, a trust could be an unnecessarily expensive structure to have. Yeah. But hey, Dee, how awesome if you are off leave, sorry, off work on leave, to use the family trust to say distribute to yourself when you’re not earning as much so can potentially have some upsides as well?
Yeah, definitely, there can be some benefits, you just need to make sure that obviously, the benefits are going to outweigh the costs.
Captain FI 40:57
That’s the big question, isn’t it? Yeah, always do the business case analysis. That’s it. All right. So another question that I’ve been itching to ask you. What is your investing style? And how does your family invest their money?
Yes, so we use a core satellite investment approach. So the core part of our investment portfolio is index and active funds. And we do predominantly invest in an investment bond. So again, it’s for that making sure we don’t have assets in our own name. And I know investment bonds can be a bit more expensive in some cases. But when I did the analysis, because we invest every fortnight when we get paid, it actually works out to be more beneficial for us to have that investment bond than paying brokerage each transaction each fortnight. And, you know, I really need to structure things that way. Because just like everybody else, my husband and I have different spending and savings styles and different investment styles. So it really works for us to make sure that when we get paid, the money is out and invested in gone, so my husband can’t see it. The investment bond is also really good, because my husband knows that’s a 10 year timeframe, we we haven’t touched that for 10 years. So yeah, we also do have some individual shares outside of our index and active funds. And that’s more for I guess, personal interest and fun in terms of other investments. You know, we don’t have an investment property. I’ve had one in the past. It’s not my cup of tea. I just am Yeah, we’re both just too busy to be having that. Having that to worry about as well. But yeah, never know what will happen in the future. But at the moment we purely invest in Yeah, basically shares Australian and international shares in that core satellite dial.
Captain FI 43:06
I don’t personally know a lot about the investment bonds. I am learning a bit more about them at the moment. And I’m hoping to actually write something up about my experience and see whether it’s something I’m going to jump into. But yeah, it’s always interesting to see how people’s investing strategies deviate. I guess it comes back to it sounds like you and your husband both really love your jobs, working for a not for profit. It sounds like you know, you kind of are almost living your your financial independence dream. Now, I know a lot of people in the industry are, you know, very heavy on building a portfolio of index funds in a brokerage account, and then quitting their job. But it kind of sounds like that’s not the path you’re taking.
Yeah, 100% my husband actually works for not for profit as well, which I yeah, forgot to mention earlier. So we really do love what we do. And we can’t ever see ourselves retiring. And I do hope that I’ll be able to continue giving financial advice until I die basically. And so I guess, you know, taking this job, I’ve only been here for about 18 months now. And Previous to that I was working for a boutique financial planning firm who self license and independent dealt with mainly high net wealth people. And it was a very stressful job. And I did long hours. And I tried to go back to that job after I had my first child. And I tried different, you know, ways of working so I tried to work part time and I tried, you know, different hours and I tried all sorts of things. But it just the reality was I had changed as a person. And so that no longer aligned to my personal goals and objectives. So that’s why I had left and now Looking for a not for profit, which does align more to my values.
Captain FI 45:05
That’s awesome. And I know a lot of people who are listening to this are doing so because they in some way or another, and not really where they want to be in life. And financial independence gives an incredible amount of power and freedom and choice back to us. So it’s awesome to hear that you’re exactly where you want to be.
Yeah, definitely. But yeah, just like everybody else with my husband, and I have always wanted to make sure that we’re in a position and you know, we are in a position that if we wanted to take a few days off work, or cut back on work, we could and so the role I’m in now is incredibly flexible. And you know, I’m often posting on Instagram, like, it’s the middle of the day, and I’m at the gym, because I’m in between client meetings, and, you know, things like that. It’s just a really, yeah, it’s definitely been a bit of fit for me, especially. And I started this role, actually, when I was a couple of months pregnant with my second baby. And I had people telling me, that wasn’t the right career move to be moving into this role, but I just knew from a family perspective, it was going to be a lot less stressful, and I’d be a lot happier in it. And yeah, I do not regret my decision one bit.
Captain FI 46:19
Flick flexibility, and, you know, a happy work environment. Massive,
Unknown Speaker 46:25
Captain FI 46:26
The just on that, how has being a parent changed your approach to money and Finance?
Yeah, it’s changed a number of different ways. I think, you know, it will, from a practical point of view, were probably spending less money now in terms of like, lifestyle stuff. Because the way we socialize is very different now to when we would do, you know, double income, no kids. Um, so you know, a lot more of our social life is around, you know, going to the park and picnics, rather than going to try the latest restaurants. So that’s quite different. We’ve also got, I think, a lot more goals around voluntee and charitable giving. So, for example, both my husband and I, mental university students, you know, we want to be able to help those next generations, I guess. You know, I find something they’re passionate about. So we that’s quite changed. And we’ve got, from the charitable side of things, we’ve got a sponsor child, for my son, and we plan on sponsoring another child to my daughter with the Smith family. Yeah, I think that’s really special because we give and receive letters from our sponsor a child. And I think it’s important that my children grow up realizing how privileged they are, and put some perspective back into their lives. So that’s been really important for us since having children. And yeah, as I mentioned, like, we’ve got that stronger desire to reach financial independence. So that, you know, as I mentioned, if we needed to take some time off work, because, you know, one of the kids is sick or going through a hard time, emotionally or mentally we can. And it’s really important to us that we do significantly cut back on work when our kids are in high school, because they may not think that they’ll need us around. But they will emotionally I think, because it’s quite a tough time in a anybody’s life, I think going through high school, and that, you know, you’re really growing into yourself. So that’s why I guess we’ve got that desire to work really hard now. so that by the time High School comes around, we’re really cruising the other way things have changed is it’s not it’s, I guess, kind of money related, but we are a lot more focused on sustainability. And so we’re more willing to pay for things that are Australian made or more sustainable for the long term. Yes, it might cost us more. But there’s no point having money if there’s no world around in the future.
Captain FI 49:09
So having having children has really given you an even longer term focus or outlook in life.
Yeah, definitely. Yeah. No point building that generational wealth for our kids. If there’s no planet,
Captain FI 49:21
it’s a it’s a big issue. It’s a big issue. And even even there’s, I’m looking into things like ethical ETFs. Yes, I’m looking at things like ethical use of Super. So you know, maybe that’s something we can, we can discuss down the track, and we can get those added to your approved product list.
Yeah, definitely. Actually, the company I work for does have a strong ESG focus, which is really great. And it is actually a legal requirement that financial planners do ask if there is any ESG or personal ethical preferences that the client has to take into account with the investment recommendations. So yeah, I think that’s quite different this year to previous years that we actually have that legal obligation to ask that now.
Captain FI 50:05
It’s quite interesting. Even just talking to you today, I, you know, I used to think financial advisors were kind of cowboys out in the wild. But I’m slowly starting to come around to see, you know, they probably do have an important place for a lot of people.
Yeah, definitely. I mean, you know, our superannuation industry alone is growing at a crazy rate. So, financial advisors are extremely important, because just even with superannuation, things are so complex there. The rules are quite hard to understand, unless you’re doing that every day. And yeah, I do. I do hear that comment a lot, where people think that, yeah, financial advisors are cowboys. But, you know, I like to think of myself as the new breed of financial advisor. So I am really focused on rebranding our industry into a profession and changing that perception.
Captain FI 51:03
You said, You’ve got two young children at the moment. Now being someone who’s quite financially savvy, and I know you’ve touched on this on your Instagram. But How can parents with young children particularly work around childcare benefits?
Yeah, child K is it needs a real overhaul the system? Yeah, unfortunately, there’s no real way of minimizing childcare fees. Because you can’t like salary sacrifice your way out of it or anything, it is income tested. And, you know, they’ll add back things like property losses, and salary sacrifice and those types of things into the calculation. But I guess the biggest things to think about with childcare is that it is a family expense, it’s not the woman’s expense, or the mums expense. So it should be taken into account from both salaries, not just you know, Mum salary. So I think that’s really important. And also I, I am really passionate about women having their own money. So even if it’s just one day, a week of work, I think it’s really important, you’ll you never know when something might happen to your partner, and they might not be around anymore. And if you’ve taken us out of the workforce, because of a cost like childcare, it could be very difficult to get back in late, Ron, if your skills aren’t kept up to date, you know, even things like if a woman is working part time, the research says that they’re less likely to be promoted, and less likely to continue on that trajectory trajectory with their career, you know, it’s taking into account those sort of future benefits, as well as things like you know, the superannuation benefits, which is obviously a big one to women, currently retiring with about half the amount of superannuation as men, just thinking about also that social aspect as well in the mental health aspect. So being a stay at home mom is incredibly hard. And I take my hat off to any parent that does that, say at home and just talking to kids all day. Yeah, it’s tough work. And also, I think, you know, from the child’s perspective, childcare offers such fantastic benefits from from a child’s social learning. So I absolutely love childcare. And I, you know, I hate the fees as how as high as they are, but in saying that, I also think childcare workers do not get paid enough for what they do. And I do hope that the system can be overhauled, and perhaps we can have more of a not for profit system with childcare so that, you know, the workers can get paid better, but then also parents are able to continue working.
Captain FI 53:42
If you had children, and you’re looking into childcare for the first time. What where would you suggest parents go for more information?
Ah, okay. Um, on services, Australia, which is the old center links website, it’s called services Australia. Now, there’s information about the childcare subsidy. And so you can learn about that. But it is very difficult to understand sometimes those websites, if there’s any sort of mums groups that you’re part of on Facebook or anything like that, that’s a good place as well to ask questions and get information from other parents. But yeah, there’s actually no again, one quizzes, income tested, it depends on the type of childcare. You know, there’s lots of different things that will factor into how the fees are charged and how you how much your pays so it’s, yeah, no one size fits all again, unfortunately,
Captain FI 54:44
it’s not something that a financial advisor would be able to advise on.
A yes and no, I find that the financial advisors that do know anything about it, the parents themselves, so it’s more from a personal learning experience and you know, it’d be very difficult to, I guess, charge somebody for advice on that. So yeah, yeah, it’s not really something a financial advisor would typically advise on. And so yeah, might be better off just trying to learn. Learn yourself, unfortunately, and is really just a minefield.
Captain FI 55:21
Yeah. Okay, well, good luck to any new parents out there. You heard it straight from a financial advisor, jump online, try and get into the moms groups and find out any way you can. Alright, one more question about financial advice stuff? What is your take on private versus public health insurance in Australia? And which one do you go with?
And this is an interesting one, we’ve talked about this before, privately. I’ve been exposed to both systems in my time. So both personally, and from my broader family situation. I think we’re incredibly lucky in Australia to have the public system that we do have, however, after experiencing things myself, because I can afford to, I won’t ever be without private health cover. So I’ve had a child both through public and private systems. And, you know, I’ve also had a family member, initially, for mental health reasons be put into a public psychiatric ward in a hospital. And then we moved them into a private facility. And again, based on that experience, yeah, I would never want to be without private health. And I guess the system is designed that way that the whole purpose of the Medicare levy surcharge is that those that can afford to buy private health should be doing that, because it’s taking the pressure off the public system. So that’s what it’s designed for. And yeah, that’s why I would always have private health.
Captain FI 57:07
Okay. And just to unpack that a little bit more now, I write an article on this a while ago, and by the way, thank you so much for your help with that, speaking to is really useful in, in actually understanding how that all works. Now, I’ve got private health insurance, through my work as well. And this is always something that I’ve just struggled with, whether I was going to pay for that myself, should I ever leave, you know, full time flying work, or whether I should just stay with the public system, I’ve got a big family, and there isn’t really a lot of wealth in my family. So we’ve got a lot of experience in the public system, which, you know, I’ll admit hasn’t been the best, but it has been pretty good. A lot of my nieces and nephews successfully delivered through the public system. But I feel like I definitely don’t know enough. So I’m always wanting to pick the brains of anyone I can when it comes to this topic. Could you perhaps explain a little bit more about the, I guess, the Medicare levy surcharge and the implications of not going for private health insurance when you when you could afford it?
Yeah. So if you earn as a single person above a certain amount about 90,000, or I think it’s 180,000 as a family, and there’s different t t amount. So if you earn between that and a different amount, you get charged one fee, or one extra tax, I should say, one extra Medicare levy surcharge. And if you earn above a different amounts, a different surcharge. So it’s different amounts. But basically, if you don’t have private health, and you’re considered sort of a higher income earner, the A to will the Australian Tax Office will tax you an extra amount. And so it’s designed to encourage you to go by private health. And sometimes the profit health may end up being cheaper than the Medicare levy surcharge, or it might be the same or it might be expensive, more expensive. It really depends on the type of cover you have. And I think just like any other insurance, it’s about weighing up the risk of something happening and claiming it verse paying the premiums. So it’s just like being totally and permanently disabled. For example, what’s the risk of me climbing on that verse, the premium that I could just pay now to cover me for that risk. And the same with the private health. I might never ever need to worry about putting any of my family members into a private psychiatric clinic. But it’s around having that peace of mind to know that if something does happen, I’ve got That cover so I can give them the best treatment that I can.
Captain FI 1:00:03
Okay, so it all comes down to really your personal circumstance. And again, no one size fits all, or dance or level of comfort, again, your level of income. And so is this something a financial advisor can help you through?
Yeah, typically, a lot of financial advisors don’t, aren’t qualified to talk about private health insurance. And so where I have found it helpful, because yeah, I haven’t even really learned about this in my studies, the way I’ve learned about private health, again, his personal experience, and also speaking to companies, I select and compare the market as a starting point to get some information and learn more about those different products, obviously, reading the product disclosure statement, which can be quite boring for some people, but that’s how I’ve really learned about private health myself, as well as that personal experience.
Captain FI 1:00:58
So there you go, maybe something to be said for picking a financial advisor with a little bit more life experience behind them.
Yeah, yeah, definitely. And, you know, with private health insurance, just like any other insurance, it’s going to depend on where you live as well as to what the premiums might be sorry. They’re different for every state and region, just like your car insurance. So yeah, there is no one size fits all unfortunately.
Captain FI 1:01:25
Haha, just like a, just like we’ve been saying this whole. Yeah. So look, it’s been awesome chatting to you today. Do I just want to finish up with the two questions that I asked? Absolutely, everyone. So the second last question is, if you could give three recommendations for some of your favorite personal finance, investing, or self development, books, blogs, or podcasts, what would be the best three that you found?
Oh, only three. cruel and cruel. Okay, um, a book that I discovered this year, which I absolutely loved, is called the life plan by Shana Kennedy. And it is, I think, perfect for the fire community. Because it really helps you design a life that you want to live based on your values. And it helps you identify, you know, the clutter in your life and the stuff that doesn’t give you value, and ways to manage that. And just effectively how to build your dream life. So really recommend that one from sort of a self development perspective. Okay, so I’ll pick one for sort of the working mums, since that’s really, I guess, my target area. I think a great book that I get are read DC was called the mother of the mother of all jobs by Christine Armstrong. And in this book, it is a series of, I guess, case studies, around working moms and working parents. And I think even dads should read this book too. And yeah, a series of case studies around different life stages of the child. So from birth to preschool and childcare to, you know, high school, and then past high school, and it has some really good information and tips. And effectively the outcome of that book. I don’t know if I should give the spoiler alert. But effectively, the way our system is set up, is so that only one parent works. And the other one is either stay at home or work part time. So I guess it’s really reassuring to read that book and know as a parent, you’re not failing, the system is failing you because it’s not set up for both parents to work and succeed in their careers. So I think that’s an excellent book for the working parents. And to give a finance one, I really enjoy my millennial money podcast by Glenn James. He does a lot of strategy topics, as well as you know, touching a little bit on investing as well. But I have really enjoyed that one and got my husband on to that because I think it’s really helped him. You know, sometimes taking advice from somebody you know, you kind of don’t want them just telling you what to do. So it’s been really great for our relationship for him to learn things himself, and then come to me when he wants to, you know, talk about a topic a little bit more. So, just like everybody else’s relationships, we’ve got, you know, barriers around You know, personal finance. To me, that’s a really helpful,
Captain FI 1:05:04
fantastic recommendations. They are actually recently discovered the my millennial money podcast as well. And I think it’s fantastic. He’s also got some pretty cool stuff online as well. Yeah. And it’s really funny. You mentioned that in a previous relationship. I have had same barrier when it comes to personal finance. But thankfully, she’s on the money podcast was a great way for my, for my ex to get into personal finance. So you know, the guy so you’ve got my millennial money where you can send your husband to Yeah.
Yeah, that’s it. Yeah, that’s not the good one as well. She’s on the money. Yep. Yeah.
Captain FI 1:05:46
Awesome. All right. So now comes the crew, the crew question, if you could summarize into three pieces of advice. Are your top tips for someone on the path to financial independence? What would you say to them?
Yeah, um, so number one is spend less than what you earn. It’s not rocket science. But unfortunately, it’s easy to happen, you know, with marketing and consumerism and all that stuff these days. But yeah, spend less than what you earn. Number two would be to invest in yourself. So both from an educational point of view, and also a health point of view. And I think my last point would be that once you have, you know, built your foundations and established yourself in terms of your career and your lifestyle assets, try to avoid that lifestyle creep of buying a bigger house and a newer car, which is often what happens as people earn more money or grow their family. So really, just try and focus on growing those investable assets to help you be able to have that freedom, which is what we’re all trying to, to get.
Captain FI 1:07:04
That’s awesome. And just on that last one, you’ve kind of done the opposite of lifestyle creep, haven’t you? You started out with a new car and you’ve been more humble.
Yeah, that’s it.
Captain FI 1:07:16
Awesome. Hey, Dave, it’s been absolutely awesome chatting to you today. Thanks so much for making time out of your busy schedule. For listeners wanting to track you down and find more about you. What’s the best place for them to get in touch?
Yeah, I really only got my Instagram account budget both babies that I’m on. And I am pretty much anonymous because semi anonymous these days your nickname Dino and I’ll occasionally show my face on there. But I do have to keep it pretty anonymous due to my day job and employment contract and licensing arrangements. So yeah, I pretty much only got that Instagram account these days.
Captain FI 1:07:58
Well, no worries. If anyone wants to follow you on Instagram. I’ll leave a link to your Instagram account in the show notes. And I’ll also be tagging you in the post about this episode. Again, they I totally understand the one need for a non non limiti record. I’m in I’m in a very similar boat. So I totally respect that. And if anyone wants to come and follow you, hopefully they can, they can do so on your channel.
Unknown Speaker 1:08:30
Captain FI 1:08:31
No worries CD. Thanks for listening to another episode of the Captain FI Financial Independence Podcast. To read the transcripts or check out the show notes. Head over to www dot Captain fi.com for all the details. If you have a question for the captain, make sure to get in touch. You might even make it on the airwaves. You can reach me online through the Captain FI contact form or get in touch through the socials. I’m active on Facebook and Instagram as well as a number of online finance and investing forums. And finally, remember the information presented on the show and the links provided for general information purposes only. They should not be taken as constituting professional financial advice. You should always do your own research when making any financial decisions and make sure it’s appropriate for your personal circumstance.