One of the many complex and confusing issues faced by consumers of financial services is to understand the differences between the terms financial adviser, financial planner and financial counsellor.
The objective of this article is to explain the differences, why they matter, and to outline the basics of the services you should expect from each of them.
The good news is that’s there is no difference between the terms financial adviser and financial planner. They are interchangeable.
Both terms refer to individuals who are licensed through a government-issued licence (called an Australian Financial Services Licence or AFSL) to offer personal financial advisory services to members of the public, including advice on financial products, for which they may charge a fee based on an hourly rate, a flat amount or a percentage paid by you out of your investments. Or they may earn a commission or other incentive paid by a financial institution with which they have a commercial arrangement (often a life insurance company).
The precise nature and scope of those services, the manner in which the adviser is remunerated and the ownership/commercial associations of the adviser must be outlined clearly in a mandatory document called the Financial Services Guide (FSG). Your adviser/planner must give you a copy of this document and we recommend that you read it.
It’s especially important to understand how your adviser is remunerated. In saying this, we are not suggesting that all financial advisers/planners are likely to give you poor advice, however, we are saying that conflicts of interest (especially those caused by remuneration arrangements and ownership) may influence the independence of the advice and whether it is offered in your best interests. To understand this concept, we recommend that you take the time to watch our short film Financial Advisers – The Facts and the Fiction.
We also recommend that you should:
a) read the Centre’s website content on Getting Financial Advice; and
b) consider seeking advice from a purely “fee for service” adviser/planner listed in the ADF Financial Advice Referral Program.
Personal financial advice can be expensive. Thousands of dollars per annum is common. Therefore, make sure you understand exactly what the adviser/planner is going to do for you and how much it’s going to cost in dollars annually (not just in percentages which can be misleading).
For example, not all advisers/planners will be interested in engaging with you on small, one-off matters, so it’s important to have that conversation up-front. There’s more on the types of advice offered by financial advisers/planners on the Centre’s website.
Unlike financial advisers/planners, financial counsellors are specifically qualified and trained to help people who are experiencing financial difficulty.
Importantly, their services are free and confidential. They do not offer financial advice/planning services or financial product advice (as described above).
The professional expertise of financial counsellors lies in their knowledge and training about credit, bankruptcy and debt collection laws, government welfare and support arrangements and industry hardship practices. They are also trained in negotiation and counselling skills.
In summary, financial counsellors may assist you in:
It’s important to understand that the role of a financial counsellor is to assist you in developing options to alleviate your financial difficulty. It’s not to make personal financial decisions for you. It’s up to you to make decisions about how to manage your financial situation with the assistance of the advice and options you’ve been offered by the counsellor.
Financial counsellors do not:
Financial Counselling Services may be accessed through:
National Debt Helpline – 1800 007 007
The free National Debt Helpline is open from 9.30am to 4.30pm, Monday to Friday.
When you call, you’ll be transferred to the service in your state.
Mob Strong Debt Helpline – 1800 808 488
Mob Strong Debt Helpline is a free legal advice service about money matters for Aboriginal and Torres Strait Islander peoples from anywhere in Australia.
This is open from 9.30am to 4.30pm, Monday to Friday.
Small Business Debt Helpline – 1800 413 828
If your family business is struggling because of COVID-19 or natural disasters, call the Small Business Debt Helpline.
This is open 9.00am to 5.30pm, Monday to Friday.
Farmers or rural and regional businesses
Farmers and other rural businesses struggling due to drought or other hardship can talk to a rural financial counsellor. The government is funding financial counselling for small regional businesses affected by COVID-19.
Do Not Ignore or Defer the Problem
The important point here is that if you are feeling overwhelmed by financial pressure and debts, do not ignore or defer the problem. By contacting a financial counselling service as soon as possible, you will maximise your options and increase your chances of a successful outcome.
Like to Know More?
If you’re unsure about whether you need a financial adviser/planner or a financial counsellor; or you’d like to know more about how a financial counsellor may be able to assist in resolving your difficulties; or you need guidance in contacting a suitable financial counsellor, you are most welcome to contact the Centre.
Super can be much harder to quantify if you are a member of MSBS or DFRDB, known as defined benefit schemes. This is because the bulk of your super benefit will likely be in the form of a lifetime indexed pension, based on your years of service and final average salary. The longer you stay in Defence, the larger your lifetime pension. This cannot easily be compared to a standard accumulation super fund. Please contact the Commonwealth Superannuation Corporation (CSC) for an estimate or your current benefit.
If you have an accumulation super fund, like ADF Super, it’s much easier to compare the superannuation you get from Defence with that of a civilian employer. Generally employers pay super at a rate of 9.5% of your ordinary salary and allowances, Defence pays super to accumulation fund members at a rate of 16.4%, well above the minimum requirement.
You may not appreciate the value of your generous superannuation benefits now, but you certainly will in years to come.
ADF members receive, statutory death and invalidity cover, and rehabilitation services if needed. To replace this cover in civilian employment, you may need to take out personal insurance, such as death, disability, trauma and income protection. The cost would depend on your age and personal circumstances but could cost thousands of dollars a year.
The ADF offers free education and training and/or study assistance schemes. If you’ve been receiving tertiary education at no cost or received any form of study assistance, consider what it might cost to continue your education outside Defence.
Take some time to think about these and any other benefits provided to you by Defence to get a better understanding of the real value of your employment package.
As an ADF member you will usually receive subsidised housing or rental assistance if you are not living in your own home. If you buy a home to live in you may be eligible for a range of other assistance schemes.
If you are receiving rental assistance you can calculate the value by multiplying the fortnightly assistance amount by 26 to get an approximate annual benefit.
If you’re in service housing you can estimate your benefit by deducting the rent contribution taken out of your pay, from the amount of rent you would pay each fortnight for a similar property in the same area. Multiply the result by 26 to estimate your annual benefit.
Housing assistance schemes for members buying a property include the Defence Home Ownership Assistance Scheme (DHOAS), Home purchase assistance scheme (HPAS) and Home purchase or sale expenses allowance (HPSEA)
Serving ADF members receive a range of healthcare benefits, including free medical and dental treatments, rehabilitation services, psychological support and access to fitness facilities like gyms, pools and sporting fields.
To put a value on these benefits, think about what you might be paying for if you were not an ADF member. For example, what would it cost you for private health insurance, prescriptions, physiotherapist, dentist, specialist visits, gym membership or other fitness related costs?
Medicare covers the costs of being admitted to hospital as a public patient, some of the fees charged by GPs and other medical professionals, and subsidised prescription costs for medicines listed on the Pharmaceutical Benefits Scheme (PBS). ADF members don’t pay the Medicare levy, currently 2% of taxable income.
Private health insurance covers some or all of the cost of a range of services not covered by Medicare, for example, a private hospital and the doctor of your choice, as well as ancillary services such as dental, optical and physiotherapy, not covered by Medicare.
Your pay consists of a base salary, with the addition of employment-related allowances. Your base salary can be found at the top of your payslip on the right, listed as ‘Annual salary’. If you need help reading your payslip, see the ADF guide on Pay and Allowances.
Note: From 13 May 2021, service, trainee, reserve and uniform allowances will be rolled into a single ‘Military salary’.
The earnings section of your payslip lists any allowances you receive. The amount in the ‘Current’ column is the amount you get every fortnight for each allowance. You can add allowances by typing in the name of the allowance in the ‘Add allowance’ box and clicking the + symbol.
A deployment provides some ADF members with additional allowances that are not part of regular pay. We have not included these allowances in the calculation of your remuneration package, however, you may want to take the additional deployment allowances into account if you are comparing your ADF remuneration with civilian employment.
Medium-term goals are those that you want to achieve in 3-6 years. This could include saving for a home deposit, paying off your car or paying down all your loan debts. Having a budget and your goals written down.
Long-term goals are plans you want to achieve in around 7 years or more. This could include buying a home or paying off your mortgage, paying for your children’s education or saving for retirement.
For long-term goals think about investing some of your money. Get some financial advice to work out a good investment strategy to reach your goals.
Be financially fit from ADF Consumer Centre on Vimeo.
MSBS is a hybrid defined benefit and accumulation super scheme which closed to new members on 30 June 2016. If you are an MSBS member, your benefit will consist of a lifetime indexed pension (employer component) based on your final average salary and years of service. Some or all of this benefit can be taken as a lump sum when you have met a condition of release (the defined benefit). The scheme also has a member component made up of your compulsory and voluntary personal contributions, ancillary contributions and investment returns, that you will also receive as a lump sum when you have met a condition of release (the accumulation benefit).
The pension component can be taken from age 55. If you are retiring or resigning from the ADF after reaching age 55 or are entitled to a Class A or Class B invalidity pension, you will be eligible for a pension when you leave the Service. For all other members, your employer benefit will freeze and be preserved, increasing with CPI each year, until you are eligible to receive it.
The member component of your benefit may be left in MSBS, where it will increase with investment returns each year until you access it, or it can be rolled over to another complying super fund.
For more information contact the Commonwealth Superannuation Corporation (CSC).
If you joined the ADF for the first time after 30 June 2016, you will fall under the ADF superannuation arrangement, and will be a member of an accumulation fund, such as ADF Super. If you had previously served, and are a member of MSBS, you will be re-entered into MSBS on rejoining the Service.
For accumulation fund (eg. ADF Super) members, your benefit will be a lump sum based on contributions and investment returns. When you leave Defence, your money can be left in the fund, where it will continue to grow with investment returns until you meet a condition of release, or it can be rolled into another super fund.
If you’ve been in the Service for more than 12 consecutive months, you can keep your ADF Super account when you transition out and your new employer can contribute to ADF Super. In this case your insurance cover will change so contact the Commonwealth Superannuation Corporation (CSC) to find out what you need to know.
DFRDB is a defined benefit super scheme which closed to new members on 30 September 1991. If you are a DFRDB member, you will receive a lifetime indexed pension based on your final salary and years of service. Part of your benefit may be commuted into a lump sum, and you may receive an additional lump sum from your MSBS ancillary account, made up of voluntary personal contributions, amounts transferred in from other funds and other contributions, plus investment returns.
For more information contact the Commonwealth Superannuation Corporation (CSC).
Short-term goals are things you want to achieve within the next couple of years. These goals could be to pay off your credit card debt, buy a new TV, go on a holiday or buy a car. Whatever you have in mind, set yourself a realistic timeframe. The best way to save for short-term goals is to reduce your spending on non-essential items, like entertainment, dining out, memberships or subscriptions. It is often easier to stay on top of your spending if you use cash, EFTPOS or a debit card when shopping instead of using your credit card.
Make your savings work for you by putting your money into an account where it will grow. Savings accounts are great because you can earn compound interest on your savings. If you’re on a low income, you may qualify for one of the savings programs offered by some charitable organisations.