Summary: The vast majority of individuals should avoid using financial service professionals: financial planners, bank advisors, accountants, tax agents, brokers for insurance or lending, or lawyers. Those with unavoidably-complex affairs or who are in the top 5% of wealth or income may benefit from carefully-selected professional services with flat fees (not percentages of their investments). But most people will be paying for services and financial products they don't really need or which aren't worth the cost, effort or stress.

Remember the key principle of building wealth: Spend less than you earn and invest the difference wisely. The myriad professional services aren't really going to help you earn more or spend less; reading the best blogs and educating yourself is far more important. As for investing wisely, this is where the greatest damage is done by most advice, products and their costs. Most people will benefit from moving toward passive, automated investing in index funds based on simplified "robo-advice" tools (see the Stockspot blog for excellent reasons why). And there are other worthwhile investments like RateSetter Australia that one can evaluate and manage yourself simply by reading free blogs like this one.

Gain: ~$500 to $5,000 a year in avoidable fees, commissions, unnecessary financial products (e.g. insurance), and unwise investments.

My Situation: I have never paid for any professional service including planners, accountants, brokers, tax agents, lawyers or private banking advisors. I deliberately keep my financial affairs and investments simple so as to minimise the time and effort required to manage them. Happily, keeping investments as simple and passive as possible is also the optimal way to invest for almost everyone.

Details:

Comments on ASIC's guidance on financial advice

Many professional services fall under the financial advice umbrella, so I'll use it as the chief example. But the same arguments apply to all personal finance professional services.

A good place to start is reviewing ASIC's MoneySmart website:

MoneySmart: Investing > Financial advice
> Identifying your financial advice needs
> Robo-advice
> Financial advice costs
> What to look for in financial advice

This is what ASIC has to say about when and why to get professional financial advice:

Don't think an adviser will make you a millionaire through a secret formula or a magic ability to pick winning investments. Advisers mostly add value by helping you sort out your financial goals and working with you to develop a plan to achieve them over time. Most importantly, working with an adviser will help you turn thought into action, especially if you tend to put things off. 

Advice is helpful in times of change
Professional advice is most valuable when you're going through a big life event like starting a family, being retrenched or managing an inheritance. It's also great for less immediate goals like growing your super or planning for retirement.
MoneySmart - Identifying your financial advice needs

And on the topic of robo-advice it implies if you can afford to pay for advice with a professional that would be preferable:

Robo-advice
This style of advice may have lower advice fees than traditional financial advisers as they are not using people to assess your needs. Robo-advice may be an option for people who can't afford full service financial advice, only have a small amount to invest, or have simple advice needs.
MoneySmart - Robo-advice

But here is ASIC's own example of the costs of professional financial advice: On investments of $200,000 the cost is $8,000 in the first year and $4,000 for each year after that. Plus extra if your circumstances and goals change and you need to update your financial plan.


This is a ridiculous amount to pay for a few hours help clarifying your financial goals, being sold products you don't need (most insurance), and being told to make investment choices that are usually far from optimal (not passive, ultra low-fee index funds or LICs).

These fees will only detract from your wealth-building efforts, especially if ongoing and you didn't luck out with one of the few financial planners aligned with the perspective on this blog.

As for the fundamentals of finding ways to save money, eliminating debt, effective budgeting, managing your superannuation, ethically reducing tax, and properly tracking your wealth, these are all critical things everyone has to learn themselves so that they can do them proactively throughout their lifetime.

Amusingly, ASIC's go-to money educator for it's videos and education programs, Scott Pape, has this to say about paying for professional financial advice in his $397/year Barefoot Blueprint advertising:

At one point in your life you’ve probably taken a few steps to move beyond ‘okay’.
Having been ‘Barefoot’ for well over a decade, I can pinpoint the ‘pressure points’, that trigger people to ‘scratch’ their financial ‘itch’.
Sometimes it happens when you want to settle down.
Sometimes it happens when you walk out of a relationship.
Sometimes it’s when you have a birthday with a zero on the end of it.
And then, what do you do next? 

You could go and see a financial advisor or a consultant from your bank. (Actually, it’s all the same — 80% of advisors are controlled by the big banks anyway).
And before you know it you’ve bought the financial equivalent of a Fitness First gym membership: lots of contracts to sign, glossy brochures, and a confusing ‘plan’ that only hardcore freaks will follow….and in two months’ time you’ll regret the decision.
It gets worse though….because independent studies show that the financial advisor will cream off hundreds of thousands of dollars in fees over the average Aussies working life.
Barefoot Investor - Blueprint

Scott Pape's warning and summary is accurate for most financial advisors. And you don't need to buy his Barefoot Blueprint either, though if you are determined to buy something, find his style works for you, and free blog content (including Scott's own) isn't enough, then by all means subscribe for just one year and use the time to educate yourself and take action. However, I would recommend against investing in Barefoot's individual stock recommendations - this service simply exists to keep subscriptions ongoing. Passive share investing via index funds or the most reliable LICs (when not overpriced) is much safer and will deliver more reliable returns.

Further Reading:
> Most big bank planners fail to act in their client's interests - ASIC


Where to find alternatives to the things financial service professionals provide?

I'll eventually cover or directly link to most of the essentials on this blog. And I collate recommended websites for Australians in this post:
> Change to reading only the most useful personal finance websites

ASIC's MoneySmart website is also a decent (though far from perfect) starting point:

> Managing your money > Get your money on track
> Investing
> Superannuation & retirement

For investment discussion of low-cost, passive, automated investing in index funds, I highly recommend the Stockspot blog.


What about tax minimisation advice?

The dirty secret of the financial planning industry is that most of the value is in tax minimisation. Australia has a ridiculously complex tax system with many inequities, resulting in loopholes and tax shelters that have very large payoffs.

Superannuation, aged pension asset exemptions for the family home, family trusts, paying the corporate tax rate instead of higher income taxes, minimising capital gains tax, exploiting depreciation, negative gearing property, family income splitting via asset ownership and businesses, and inflating deductions (e.g. car or work travel expenses) are just some of the ways you can minimise taxes.

My view is that you can easily learn yourself the ethical methods to avoid being a complete tax sucker: such as income smoothing between financial years, using low-cost private hospital insurance to avoid the Medicare Levy Surcharge, diversifying investments to use growth rather than income during your highest earning employment years, making donations and reasonable superannuation contributions during the greatest income years, or ethical income splitting (e.g. sole breadwinner supporting other dependents).

But you should be proud to always pay a fair proportion of tax on your income. While there is a lot of waste and government expenditure I disagree with, it also funds many things I actively wish to contribute to: health, the welfare safety net, education, emergency services, various public goods.

Hence, rather than chase down every tax minimisation scheme, I recommend avoiding all of the ethically-dubious ones. There's actually an easy way to tell the difference: the ethically-dubious ones are complex, have fees, and usually require financial service professionals to implement.

Thus, avoiding using financial service professionals is an easy way to remain an ethical, pro-social citizen while pursuing the path to financial freedom.


If I have to use a financial planner or adviser where should I find one?

I can't recommend any personally but suggest you do research efficiently online. The most important filter is to only work with an advisor that charges fixed, fee-for-service fees not ongoing fees, and also does not receive hidden kickback fees from the sellers of products you purchase - like insurance.

As one way of doing research, the below website allows you to look at advisor's ratings, reviews, qualifications and sample advice. It also allows you to ask questions for free if your needs are simple or to see how helpful the assistance may be.

> Adviser Ratings

For superannuation and retirement queries, the large industry super funds generally provide free advice over the phone for simpler queries and also occasionally run free seminars in major cities around the country. They also often have low-cost, fee-for-service charges for more complex queries that can still be handled by them over the phone.

For more detailed advice relating to specific circumstances, industry super funds often offer their own advisors if you can attend their head office locations in each Australian state. They can also refer you to a third party accredited advisor. The best industry super funds should not have any referral revenue from advisors and only work with advisors who charge fees on a no-commission, fee-for-service basis.

See:
> AustralianSuper - Your advice options


What about the offers to rebate fees and trailing commissions?

Very few professional financial services are worth paying for at all. The few that are worth paying for have transparent fees, rarely have commissions (if so they are transparent too) and typically do not offer rebates including through third parties. Any worthwhile fee can't be discounted.

Consequently, the offers to rebate part or all of the fees should generally just be a signal of financial products you should avoid. For example, the third party website Your Share offers to split the pointless fees with you if you use any of the ripoff providers it lists on its site. But in reality this is just a helpful list of overcharging providers you should ensure you avoid:

Your Share - Who we work with


Further Info:

Stockspot
> The need for a royal commission into banking misconduct
> Exposing the Fat Cats
> Expert help with your investment portfolio
> How to build an awesome investment portfolio
> Active vs Index investing – what’s the difference?

Choice
> Your guide to finding the best financial planner

Adviser Ratings
> Infographic: Financial Advice - What you need to know

AustralianSuper
> Your advice options