When Australians think about financial advisers, many imagine someone simply managing investments. In reality, financial advisers deal with much more than just stocks or superannuation funds. Their role spans budgeting, debt management, tax planning, insurance, retirement strategies, estate planning, and behavioural coaching. This blog explains in detail what do financial advisers deal with, how they earn, how their work affects clients, and provides real-life examples with calculations to make it practical.
Core Responsibilities: What Do Financial Advisers Deal With?
A financial adviser’s main purpose is to guide clients in making smart financial decisions that align with their goals and risk tolerance. Their services go beyond investments, offering holistic advice for all aspects of personal finance.
Understanding the Client’s Financial Picture
Before giving advice, advisers gather a full snapshot of a client’s financial situation. This includes:
- Income and expenses
- Assets (property, investments, superannuation)
- Liabilities (home loans, personal loans, credit cards)
- Tax situation
- Family and personal goals
For example, an adviser might ask: “Do you plan to buy a property in the next 5 years?” or “When would you like to retire?”
This information helps advisers identify short-term, medium-term, and long-term goals for each client.
Financial Planning & Recommendations
Once the adviser understands the client’s circumstances, they develop a plan that may include:
- Investment strategy: How much to allocate to shares, bonds, cash, and property.
- Superannuation planning: Contributions, investment choice, and retirement income strategies.
- Debt management: Refinancing, prioritising high-interest debt, and repayment strategies.
- Insurance: Life, income protection, and trauma insurance.
- Tax planning: Using deductions, offsets, and tax-effective investment structures.
- Estate planning: Wills, powers of attorney, and trusts.
They also discuss potential risks and trade-offs. For instance, investing heavily in shares might offer high returns but comes with more volatility.
Implementation of Advice
Financial advisers often help clients implement recommendations:
- Executing trades or allocating money into mutual funds, ETFs, or managed accounts
- Setting up superannuation investment changes
- Opening accounts and arranging insurance policies
- Coordinating with accountants, solicitors, or mortgage brokers
This ensures that the plan moves from theory to action.
Monitoring & Review
Financial advisers monitor their clients’ progress and make adjustments as needed:
- Reviewing portfolio performance against benchmarks
- Rebalancing asset allocations to maintain risk levels
- Updating plans after life events such as marriage, children, or inheritance
- Stress testing plans against market volatility or unexpected expenses
Behavioural Coaching
A key value of financial advisers is helping clients avoid emotional mistakes, such as selling during a market downturn or chasing high-risk investments. Studies show that disciplined guidance often improves long-term outcomes significantly.
How Financial Advisers Are Paid in Australia
Understanding adviser compensation is crucial, as it can influence the advice you receive. Financial advisers are paid mainly in three ways: fees, commissions, or salaries/bonuses.
Fee Structures
Fee-for-service advisers charge a flat fee or hourly rate for their services.
- Example: An adviser charges $200 per hour and spends 10 hours building a comprehensive financial plan.
Cost: 10 × $200 = $2,000
Percentage of Assets Under Management (AUM): This is common for investment-focused advisers.
- Example: An adviser manages $500,000 in client assets with a 1% annual AUM fee.
Annual fee: 1% × $500,000 = $5,000
Fees are often deducted directly from your investment account, simplifying payments.
Commission-Based Advice
Some advisers earn commissions from financial products, such as insurance policies or managed funds.
- Example: An adviser recommends a life insurance policy with a $1,000 annual premium and earns a 5% commission.
Commission: 5% × $1,000 = $50
Commissions can create conflicts of interest, so transparency is vital. Australian advisers must follow ASIC regulations to disclose these arrangements.
Hybrid Models
Many advisers use a combination of fees and commissions. For instance:
- Flat fee for financial plan: $2,500
- Plus small ongoing commission on insurance products
This hybrid model provides flexibility but requires careful understanding of total costs.
Salary + Bonus
Advisers employed by banks or large institutions often receive a base salary plus performance-based bonuses. Their incentives may influence product recommendations, so it’s important to understand this before engaging them.
Challenges and Conflicts Financial Advisers Face
Advisory work isn’t just about giving advice. There are ethical, regulatory, and behavioural challenges involved:
- Conflicts of interest: Commission-based advisers may prefer products that offer higher payouts.
- Fiduciary vs suitability standard: Some advisers are legally bound to act in the client’s best interest (fiduciary), while others only need to offer “suitable” options.
- Market and performance risks: Market downturns can impact the effectiveness of a plan, even if advice is sound.
- Behavioural risks: Clients may act impulsively, requiring advisers to coach and guide them.
- Regulatory compliance: Advisers must adhere to ASIC rules, maintain records, and avoid misleading conduct.
Real-Life Australian Example
Let’s consider a practical example:
Client: Sarah, 35, living in Sydney
- Salary: AUD 120,000 per year
- Savings: AUD 50,000 in cash, AUD 150,000 in super
- Debt: AUD 200,000 mortgage at 5% interest
- Goal: Buy a house in 5 years, retire at 65
Step 1: Assessment & Goal Setting
- Adviser calculates how much Sarah needs for a deposit in 5 years:
Desired house cost: AUD 800,000
Deposit target: 20% = AUD 160,000
Current savings: AUD 50,000
Additional needed: AUD 110,000 over 5 years
Monthly savings required: 110,000 ÷ (5 × 12) ≈ AUD 1,833
Step 2: Plan & Recommendation
- Keep AUD 30,000 as emergency fund
- Invest AUD 20,000 in diversified managed fund (medium risk)
- Set up a monthly savings plan of AUD 1,833 in a high-interest account or low-risk investment
- Adjust superannuation contributions to reduce tax liability
Step 3: Implementation & Fees
- Adviser charges 1% AUM for management of AUD 150,000 super = AUD 1,500/year
- Flat fee for the savings plan = AUD 2,000
Step 4: Monitoring
- Adviser reviews the portfolio annually
- Adjusts allocations if the investment grows or risk levels change
This example shows how advisers deal with multiple aspects: saving, investing, debt, and tax planning.
Benefits of Using a Financial Adviser
Hiring a financial adviser can provide Australians with several benefits:
- Holistic planning – all aspects of your financial life are considered
- Behavioural guidance – avoid emotional decisions
- Expert knowledge – advisers are familiar with super, tax, investment, and estate rules
- Time-saving – advisers handle research and implementation
- Coordination – integrate legal, tax, insurance, and investment advice
- Accountability – regular check-ins keep you on track
Questions to Ask Before Choosing an Adviser
To make the best choice, Australians should ask:
- How do you charge fees? Are there commissions involved?
- Are you bound by a fiduciary duty?
- How often will we review my plan?
- What services do you provide (tax, super, insurance, estate)?
- What is your investment philosophy?
- What credentials do you hold (CFP, FASEA, CPA)?
- Do you have a minimum investment requirement?
- How are conflicts of interest handled?
Future Trends in Financial Advice
The financial advice industry is evolving, and Australian clients may notice:
- Robo-advisers – automated investment platforms offer low-cost, algorithm-based advice.
- AI & ML – advisers use AI for portfolio optimisation and risk analysis.
- Fee transparency – more Australians prefer fee-only models for trust and clarity.
- Regulatory strengthening – ASIC and FASEA regulations continue to protect clients.
Hybrid models combining technology with human advice are becoming increasingly common.
Also Check: The Pros and Cons of Hiring a Financial Planner
Summary
Financial advisers deal with far more than picking investments. They handle comprehensive financial planning, investments, superannuation, debt management, insurance, tax, estate planning, and behavioural coaching. Understanding how they earn, the challenges they face, and how they guide clients helps Australians make informed choices and achieve long-term financial goals.
A good financial adviser not only helps plan your money but also supports discipline, risk management, and life-changing decisions — offering real value over time.
