Paul's Insights: 8 out of 10 Australians make their own financial choices

While research shows plenty of Australians believe they could benefit from professional financial advice, the cost is a key stumbling block for many. Finder’s study reported two out of five people say formal advice is too expensive.

It’s a fair point. According to Adviser Ratings, the median advice fee has jumped more than 40% in four years, and now sits at about $3,500, more than $1,000 higher than in 2018.

That’s a lot more than many people are willing to pay. An Adviser Ratings survey found over 60% of consumers who want advice said they could only afford to pay a maximum $500.

For those who can afford face to face financial advice, it can offer valuable benefits – not just helping to create wealth but also providing mentoring. If you’re in the market for a financial adviser most services offer the first consultation for free so it's a good opportunity to shop around and find a professional you're comfortable with.

Be sure to read an adviser’s financial services guide (FSG) because this tells you what fees they're charging and whether they have any ties to products the advice service may be offering.

However, not everyone wants or needs holistic advice. A range of digital tools including apps are helping Australians with money management basics like setting goals, tracking spending, setting and managing a budget, and growing personal savings.

In my experience, it’s the issue of where to invest that often sees people lack confidence. There are plenty of options to pick from. But ultimately, your choice of where to invest should come down to your personal attitude to risk, your timeframe and the good, old "sleep at night" test.

For many investors, a low-cost managed fund or exchange traded fund offers an affordable option that requires little upfront capital and costs next to nothing in fees. Of course, these investments come with risk. But the thing that mitigates this risk is time in the market and diversification, which these funds offer.  

Exchange traded funds are also at the heart of many low-cost investment services from micro-investing apps to robo advice. Whether you invest directly or via a third party platform is a personal choice. What matters is that you spend some time researching your options to make an informed decision.

Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.