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Speaker 1: You're listening to the Saturday Morning with Jack team podcast

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Speaker 1: from News Talks.

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Speaker 2: That'd be fourteen minutes to eleven. Everyone thinks that a

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Speaker 2: financial advisor is a financial advisor, but that is not

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Speaker 2: the case. Ed McKnight, our personal finance expert, is here

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Speaker 2: to shed a bit more light on it this morning.

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Speaker 2: You gotta ed great to be here, Jack, You're nice

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Speaker 2: to be chatting with you. So talk us through the

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Speaker 2: different sorts of financial advisors, because I get really confused

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Speaker 2: with this.

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Speaker 3: Well, there are five main types, and I think you're

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Speaker 3: absolutely right that most people think that a financial advisor

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Speaker 3: does absolutely everything. But what we see in New Zealand

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Speaker 3: is that they're all allowed to call themselves financial advisors,

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Speaker 3: and they should. But typically they'll specialize in one of

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Speaker 3: five things. So you might have investments, which is your

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Speaker 3: Keiwi saver, or if you're investing in managed funds or

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Speaker 3: shares or term deposits, they can help you decide, well

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Speaker 3: what am I going to invest in? And then we've

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Speaker 3: kind of got the cousin of that, which is property

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Speaker 3: investment advisors. So for the ten to eleven percent of

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Speaker 3: key we are adults who own property, they can give

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Speaker 3: you some advice around that. And then we've got budgeting

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Speaker 3: advisors on top of that. This is a different type.

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Speaker 3: These are people who look at what you're spending and

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Speaker 3: how much income is coming in and help you decide, well,

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Speaker 3: how am I going to be better with my money,

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Speaker 3: either to invest more or maybe pay off some debt

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Speaker 3: if you've got a mortgage, or perhaps even say for

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Speaker 3: that first home. And then we've even we've got two

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Speaker 3: more check. We've got mortgage advisors who specialize in helping

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Speaker 3: you get a home loan, whether for a place you

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Speaker 3: want to live in or for an investment property. And

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Speaker 3: then we've got insurance advisors as well, which could help

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Speaker 3: you get with house insurance but also with life insurance

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Speaker 3: and different things. But each of these five different types

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Speaker 3: of advisors doesn't really stray into each other's lane. They

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Speaker 3: really specialize in that one thing.

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Speaker 2: Yeah, right, So, depending on their roles and what they're

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Speaker 2: actually advising on, I suppose they are paid in different ways.

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Speaker 2: But how are financial advisors paid.

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Speaker 3: Well, A lot of people really don't know, and so

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Speaker 3: they think, oh, financial advisors must be very expensive. But

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Speaker 3: typically they'll get paid in one of three ways. The

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Speaker 3: most common, especially for mortgage advisors, insurance advisors, and properly

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Speaker 3: investment advisors is through some sort of commission. So if

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Speaker 3: you go to an insurance advisor and say, oh, I'm

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Speaker 3: thinking about taking out some life insurance or I want

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Speaker 3: to review what I've currently got, then if they help

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Speaker 3: you buy some insurance through an insurance company, then they're

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Speaker 3: going to get paid a commission. Saying with mortgage advisors,

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Speaker 3: and so sometimes people still ask me, you know, how

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Speaker 3: much does a mortgage advisor cost? And most of the

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Speaker 3: time it doesn't cost you anything because they're clipping the

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Speaker 3: ticket from the bank and it's not like you're paying

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Speaker 3: a higher interest rate for it. The service effectively feels free.

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Speaker 3: You can also have some people charge fixed fees. That's

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Speaker 3: more common for budgeting advisors, so you might go and

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Speaker 3: talk to them and it might cost two thousand dollars

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Speaker 3: or so for their advice. But for investment advisors, like

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Speaker 3: if it's your key we savor you're investing in, say

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Speaker 3: managed funds or shares, they might say, okay, you've got

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Speaker 3: one hundred thousand dollars to invest, and they might charge

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Speaker 3: you a percentage of what you're investing every year, which

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Speaker 3: might be between zero point five to kind of one percent.

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Speaker 2: Right, okay, oh yeah, yeah, okay, yeah, which, depending on

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Speaker 2: the services, might be relatively reasonable. What is the one

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Speaker 2: question you should be asking any advisor though.

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Speaker 3: Well, one of the big things that I encourage people

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Speaker 3: to ask is well what sort of clients do you

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Speaker 3: actually work with? And I I mean the thing that

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Speaker 3: gets it really gets up the goat jack, if I

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Speaker 3: could say it is people are not often and financial

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Speaker 3: advisors are often not very clear about this on their website.

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Speaker 3: I'll tell you one thing that really grinds mcgearz, especially

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Speaker 3: with investment advisors who help you invest in things like

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Speaker 3: like the managed funds and shares. Typically most of them

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Speaker 3: will have some sort of minimum that they work with.

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Speaker 3: What I mean by that is, I know of one

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Speaker 3: financial advisor who only works with people who have two

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Speaker 3: million dollars to invest for more so just wild abouts

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Speaker 3: of buddy, right, And this is it like muddy in

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Speaker 3: your house, This is it like your networth, this is

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Speaker 3: like money to invest And I'm like, but why don't

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Speaker 3: they put it on their websites they actually know, whereas

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Speaker 3: some other financial advisors will be like, oh cool, I

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Speaker 3: specialize with people who have fifty thousand dollars in their

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Speaker 3: key we save or more, which is like much more accessible,

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Speaker 3: and some people have no a bit of bit at all.

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Speaker 3: So if you've got somebody to invest, one of the

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Speaker 3: questions I always say is ask them if they've got

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Speaker 3: a bit of it that they tend to work with.

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Speaker 3: And I think the thing that you know only eighteen

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Speaker 3: percent of New Zealanders use financial advisors, will use the

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Speaker 3: financial advisor over the last twelve months. I think what

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Speaker 3: if the reasons is a lot of financial advisors don't

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Speaker 3: make it very clear about who they tend to work

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Speaker 3: with and what the process looks like at all of

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Speaker 3: those costs.

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Speaker 2: It's a pretty interesting point. It's kind of like, you know,

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Speaker 2: when you go into a fancy clothes store and they

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Speaker 2: don't have prices on anything, that's always an immediate sign

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Speaker 2: to me that you can't afford the clothes. And maybe

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Speaker 2: that could be the measure for financial advisors as well.

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Speaker 2: If they don't put a minimum on their website, then sorry,

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Speaker 2: unless you've got two million dollars, you're probably sniffing up

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Speaker 2: the wrong business. Thanks so much, Jed, appreciate your time.

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Speaker 2: Night from Obi's partners with us This Morning.

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Speaker 1: For more from Saturday Morning with Jack Tame, listen live

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Speaker 1: to News Talks ed B from nine am Saturday, or

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