A financial adviser is much like a personal trainer for physical fitness: a coach to provide training and direction and encourage discipline, according to Prime financial adviser Marcus Ainger.
“It’s as much about the psychological side as it is the ability to create wealth,” he says. Ainger, 34, has good evidence for his analogy, having recently completed his first triathlon which took months of preparation. For wealth creation, like a gym membership, good intentions are not enough, he says.
“Everyone says they manage their money, but having a budget and sticking to it is the big issue for many Australians. If I see 10 people and do a budget, nine of them would say they could save $10,000 a year.
“If I met the same clients next year, probably one or two would have managed to save that $10,000. Without something to keep them motivated and driving them, it’s much harder,” Ainger says. Prime offers a special software service, FinCoach, that tracks all spending, monitors accounts and helps clients see how and if they are going off-plan.
After budgeting, Ainger says, the next issue is cash-flow. Where should clients put their savings? Paying off the mortgage, towards their retirement, towards an investment property or other options?
“That’s where financial advice comes into play. If you are able to save that $5,000 or $10,000, that makes a huge difference to your retirement planning and your future, because we could use that money to pay down your debt and be accumulating wealth at the same time.
“It’s also about good debt and bad debt, knowing the difference between the two, and using good debt. All debt that is not deductible is bad. Putting an extra $10,000 a year into your home loan could mean the difference between a 30-year mortgage and 20 or 15 years. And you can use the money you save on the mortgage for 10 or 15 years to build your wealth over time. You increase your options,” Ainger says.
In an industry whose clients tend to be older, Ainger is passionate about reaching younger investors so they can take advantage of time and compounding to build a secure future.
“There’s a huge opportunity. Most of the population needs to work on budgeting and cash-flow and have some sort of strategy unless they are really ahead of the game, which is a small proportion,” he says.
“It suits all kinds of individuals. But it’s really for the wealth-accumulator, from early to mid-30s to about 50, that budgeting and cash-flow makes a huge difference in using equity to build wealth.”
One client in his early 30s wanted to pay off his mortgage by the time he turns 40. Ainger told him: “You’ve done a budget and said you can save $20,000 a year. But in reality you haven’t been able to do that, because we can see how much you have saved in cash.”
The client started using the FinCoach program and saw an immediate improvement. And because he had built up equity in his home, he could use that to build an investment portfolio without increasing his exposure to debt because it was paying it off on the other side. “It’s called debt recycling,” Ainger says.
Most Millennials, if they aren’t addicted to smashed avocadoes, can find $5,000 a year to invest. “It’s so fundamental for young people, it’s really like super in being able to compound and build up your savings over time. And because this potentially is money you weren’t saving in the past, we are generating new wealth and income.”
And Millennials, as a generation, tend to be tech-savvy, so find it easy to use a program like FinCoach, Ainger says.
If you would like to know more about this service, please contact Marcus on 1800 064 959
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