How to Choose the Best Financial Adviser as a Medical Student
- May 29, 2018
- Posted by: Quarles Business and Financial Strategists
- Category: Financial Advice
For medical students, especially in Australia, it’s never too early to start your financial planning journey. This article aims to help you choose the best financial adviser for your needs.
Six long years of arduous university study are coming to an end. But with this exciting time comes the stresses of living and working in the real world. As a medical practitioner, you’ll earn more than the average graduate.
Uncle Ben was right to point out to Peter Parker that “With great power comes great responsibility.” He was talking about having superpowers, not getting a medical degree or the prospect of a substantial salary, but the same idea applies: The more you have, the more you have to lose.
Students, no matter what their area of study, have financial difficulty. 2-minute noodles and reused teabags are a staple. As a young professional, you will need to remain frugal. Manage your finances well and you can truly take advantage of the wealth this career choice is capable of.
So, we’ve got some good news and some bad news for you.
The Advantages of Choosing a Medical Career
First the good news. According to the latest statistics released by the federal government, you’ll be earning $100,000 within three years of graduating. That’s around 40% more than the average annual salary of a Perth employee.
For example, your average GP earns between $200,000 – $300,000. Of course, the actual salary you’ll earn as a doctor depends on a range of factors, like:
- Where you are located (for example, if you choose to work in remote areas outside of Perth, you’re likely to be able to charge more for your services).
- The type of medical work you do (for example, specialists earn more for their services whether they work remotely or in Perth).
- Whether you work in Private Practice or a Private or Public hospital.
- How much private versus bulk billing you do.
- Whether you decide to establish your own practice or work as a staff member or contractor.
- Your vocational registration status (This affects how much your patients are able to claim through the Medicare rebate).
The Disadvantages of Choosing a Medical Career
Now for the bad news. If you studied medicine in Perth, or anywhere in Australia, you will end up with a significant HECS-HELP debt at the end of your medical degree if you weren’t able to pay for it up front. In fact, you may be in debt up to the current maximum HECS/HELP cap of $127,992.
And unlike many students, as a medical graduate, you’ll be earning enough for it to be compulsory to start repaying that debt back straight away. If you’re earning the average medical graduate salary ($100,000) in your first year, 7.5% of your income will be taken to help repay your HECS-HELP debt.
Why Is It Important to Learn About Financial Literacy?
Getting the right financial planning advice is essential from the moment you start earning money. Although you’ll likely earn more in the long you’ll be starting with a bigger debt than most. You’re also starting to earn money later than most people do, due to the time it takes to become qualified.
For example, any friends of yours who have a trade will have been earning money for years. Others who went to University but studied three and four-year degrees in Business, Engineering or Teaching will have a couple of years head-start on you in the workforce.
It will be important to start planning your financial future as soon as possible.
- Getting rid of your student HECS-HELP debt after you graduate.
- Establishing a solid financial foundation for your short, medium and long-term future.
What to Look for In a Financial Adviser
Here are our top 4 qualities an adviser providing financial planning services should have.
1. An Australian Financial Services (AFS) License
When you eventually start earning a coveted doctor’s salary, you may be the target of people looking to take advantage of you. For example, they could be offering investment scams to trick you into signing over your hard-earned money. The best way to avoid this is to always deal with a licensed financial adviser.
Under Australia’s Consumer Protection Laws, anyone giving financial planning advice must have a current AFS licence or be a representative of a license holder. These licenses are issued by the Australian Securities and Investments Commission (ASIC), which is the regulator of financial markets in Australia.
2. Hire a Local Perth Financial Adviser
Having a local financial adviser allows you to have regular personal contact with them. They should take the time to understand your situation, so they can provide you with the best possible financial planning advice.
If you’re currently studying and intend to work locally, finding a financial adviser in Perth makes sense. You should be looking to develop a long-term financial planning relationship with a local brand. Because of the nature of Perth business, building trust with someone local is the way to go.
A financial adviser should provide you with a plan that will meet your short, medium and long-term goals. They should also be prepared to meet with you regularly to review and update the plan, to make sure it continues to meet your needs as your circumstances inevitably change over time.
For example, your financial goals might look something like this:
- Get your HECS-HELP debt under control as soon as possible.
- Create a budget to help you manage your immediate finances.
- Become financially stable enough to sustain support yourself and your future goals.
- Find your niche in the industry. (Find the job that fits you and your lifestyle.)
- Buy your own home or an investment property.
- Be financially secure enough to start a family.
- Start saving for your retirement. The earlier you start, the more comfortable the lifestyle you’ll be able to lead later on. We’re all living longer these days thanks to the advances in medical technology.
3. Experience and Qualifications
In addition to having a current AFS license, look for a Perth financial adviser that has other relevant qualifications. For example, a degree in a finance or accounting-related discipline.
Ideally, you also want a financial adviser with several years of experience and a good reputation. They should also be a member of relevant industry associations (like the Financial Planning Association of Australia) and keep themselves up-to-date by attending professional development seminars.
4. Positive Reviews and Referrals
The best way to determine a financial adviser’s reputation is by doing some research on them yourself. These days, it’s very easy to do a Google search to find out information about businesses, financial advisers included. For example, check out:
- Their website’s blog to see if they publish any informative articles relevant to your financial situation.
- Social media sites (Facebook, Twitter, Google +, LinkedIn and YouTube) give you an idea of how the adviser interacts with their clients in a public forum. You’ll also be able to see public comments and ratings of their services.
In addition, if you have any friends, family or medical colleagues, who have dealt with a specific Perth financial adviser they should also be able to tell you about their experiences to help you make informed decisions.
How to Choose a Perth Financial Adviser
If you’re financial adviser ticks all 4 of the above boxes, that’s a great start. You can then dig a bit deeper before you commit to anything by doing the following:
1. Ask Them Questions
Ask them about their clients. If they have experience dealing with medical practitioners, they will have experience in dealing with people who have achieved (or are trying to achieve) similar financial goals to you.
In addition, it’s very important to ask the Perth financial adviser you’re considering about their fees as part of your evaluation process. Make sure you do this before you commit to their services. They should be able to explain all their fees to you. For example, they may charge you:
- An initial consultation fee.
- A statement of advice (SOA) fee. As part of Australia’s consumer protection laws, financial advisers must provide their clients with the document that outlines the financial planning advice they are intent on providing.This should include details about any financial planning strategies or products that are being recommended. The cost of SOAs typically vary. You could expect to be charged $200-$700 for straightforward financial planning advice. If the advice is more comprehensive, you could pay $2,000-$4,000 on average. Note that you’ll likely be liable for the SOA even if you decide not to proceed with the financial adviser’s recommendations.
- An administration fee for implementing the financial planning advice if you decide to proceed.
- Ongoing fees for monitoring your financial planning needs, including any ongoing commissions or other payments that your financial adviser receives for any products.
- Financial advisers are legally required to provide their clients with an annual fee disclosure statement that outlines what you paid them and what services you received in return. It’s up to you to ensure that you’re getting value for money. If not, choose another Perth financial adviser.
Another question you should ask your financial adviser is how they will evaluate your risk profile when preparing your financial plan. Your risk profile is important in determining suitable investments for your financial plan.
There are three broad investor risk profiles:
- Risk-averse (conservative)
- Risk-neutral (balanced)
- And Risk-seeking (aggressive)
You may have a different risk profile at different stages of your life, and a good financial adviser will help you to establish your risk profile. Taking into consideration your risk profile when giving you financial planning advice will help you achieve your goals.
Check out: Finance FAQ
2. Read Their Financial Services Guide (FSG)
Another provision of Australia’s consumer protection laws requires financial advisers to provide their potential clients with a financial services guide (FSG). This document explains important information such as:
- Their AFS license number.
- The types of financial services they offer (such as superannuation, insurance, and financial planning advice). The more services that a financial adviser offers, the more likely they’ll be able to cater for all your needs. Avoid limited financial service providers, you’ll just have to deal with more people when managing your finances.
- How they charge their clients.
- Whether they receive any commissions or benefits for any financial products they recommend.
- Whether they have any links with any financial institutions that provide products (this gives you an idea if their financial planning advice is independent or not, as well as the range of products they may recommend).
The FSG should be a written confirmation of anything the financial adviser has told you. It should give you additional peace of mind. If there is any financial planning information that you don’t understand in the FSG, ask the financial adviser for clarification.
How We Can Help
At Quarles Business and Financial Strategists, whether you are a big or small business, our business advisers and accountants have the experience and knowledge you need to succeed in business.
- An AFS license.
- We are local Perth financial advisers.
- We can help you with all your financial planning needs as your medical career evolves over time including debt reduction, wealth management, asset protection, retirement and estate planning.
- We are well qualified, with over 40 years of experience in delivering the best and most effective financial advice in Perth.
- Positive reviews and referrals from our past and current clientele
- We specialise in catering to the financial planning needs of medical professionals. We can help you to avoid the common mistakes that young doctors make.
- We’re happy to answer any questions you have via a FREE initial consultation. Our Perth office is conveniently located in Inglewood.
- You can read our financial services guide
- Tax and accounting packages (no need to panic when it comes to tax time, we can make sure you claim all the deductions you’re entitled to as a medical professional).
- Self-managed super fund advice and SMSF packages (if you want to take control of your retirement investment).
We’re a Perth-based financial advisory service which prides itself in taking care of all your short, medium and long-term financial needs. We help you plan for the long-term and can support you every step of the way as you embark on your medical career.