If you are in a position where you are struggling with debt then it can feel like you have no place to turn. However, there is always help out there, you just need to look in the right places. By learning positive money habits and how to deal with debt collectors and creditors, financial counselling can point you towards a brighter future. So what is financial counselling? Let’s dig deep and answer all of your questions.
What is a financial counsellor?
Financial counsellors are qualified professionals working for non-for-profit organisations who provide a confidential service whereby information, advice and support is provided to people in financial difficulty.
Financial counselling can help you if you are:
- Struggling to keep on top of debt, bills or fines.
- In need of advice surrounding your financial situation.
- Being harassed by debt collectors and require mediation.
- Looking to negotiate with creditors surrounding debt / bill / fine disputes.
- Feeling overwhelmed and are seeking emotional support from a trusted external source.
Are financial counsellors trustworthy?
To be a financial counsellor you must go through a rigorous legislation process to be able to hold the title of a financial counsellor. Debt and financial vulnerability are very serious and therefore people need to know they can trust their counsellor and that they are in safe hands.
Before speaking to a counsellor, always check their certificate is up to date and valid. If you’re wondering what is financial counselling then it’s definitely important to clue yourself up as much as you can and make sure you are speaking to the right people.
Is financial counselling expensive?
Struggling with money and wondering what is financial counselling? Well, the good news is, financial counselling is free and funded by the FCSP. This means that you can get financial support and guidance without putting yourself under further financial duress.
Financial planning and advice do cost money, however, so beware not to mix up the two types of services. Financial planning involves managing and advising investments while financial counselling is a service where you can receive support and guidance to help you to cope with your financial problems.
How much are financial counsellor fees?
Financial counselling DOS NOT cost money. It is designed for people who are struggling with money to help them emotionally and guide them towards having better spending habits. Financial guidance is not designed to cost money and put the client further into debt.
On the flip side to this, financial planning is designed for people who seek advice on how to make the most of their money through investments. This does cost money.
There are a number of different fees involved in financial planning. It is really hard to put a definitive price on financial planning fees since everybody’s needs are different, however, the initial financial planning set-up fees are usually between the $2,000 – $3,500 mark as shown below. Here are a few of the fees that you might come across according to MoneySmart.gov.au:
Fixed financial Planning fees:
- Statement of advice fee (usually between $2,000 – $3,500) – one off fee for preparing and setting up your plan.
- Fee to implement financial advice – one off fee for implementing the financial advice by opening accounts and purchasing investments
Optional financial planning fees:
- Monthly fee for ongoing financial advice
- Fee for financial review / changes
- Investment platform fee
- Hourly rate for ad-hoc tasks / services
Percentage-based financial planning fees:
- Asset based relative to how many assets you have in your portfolio
- Investment management fee – additional percentage fee based upon performance of investments against benchmark
What does a financial counsellor do?
A financial counsellor will work through your finances with you and help you to better manage your money. They are professionally trained and certified to a level whereby they are experts in their field. This means they can advise you on how to budget effectively, how to use different financial resources to your advantage. These resources might include super funds, credit cards reward schemes, budgeting and debt negotiation and emotional support.
Many people don’t ask what is financial counselling until it’s too late and debt has already taken over to a point where they feel trapped. The good news is that the Australian Lending Centre works with a debt relief company called Just Budget.
While Just Budget are not financial counsellors, they do exist to help you out of debt trouble. If you have found yourself in a place where debt has become unaffordable and you are missing repayments because of it, Just Budget could help. They are able to work with creditors to:
- Freeze repayments for a period of time (usually around 6 months)
- Re-negotiate repayments to a new, lower amount that is affordable
- Consolidate your debts together to make managing your finances easier
- Stop harassing contact from creditors
As well as this, they can walk you through your budget using their free online budget calculator tool.
What do financial Counsellors not do?
According to the National Debt Helpline, Financial counsellors don’t:
- Charge set up fees and/or ongoing fees for service.
- Complete tax returns.
- Provide investment advice (that’s the role of financial planners)
- Offer legal advice
How can a financial counsellor change my financial situation?
Aside from hands-on money support, a financial counsellor can also be a huge emotional support. Money trouble can be embarrassing to talk to friends and family about, but financial counsellors provide a confidential service and have the know-how to not only reassure and comfort you but also point you in the right direction.
Speaking to a financial counsellor can help to change your relationship with money and take the right steps towards a positive financial future. Whether it be budgeting help that you seek or mediation to protect you from harassing creditors, a financial counsellor can be the difference between a bleak and a bright future.
If you’re still wondering what is financial counselling then the team at Australian Lending Centre are always happy to speak and provide you with the support you need. If you have any questions then feel free to get in touch today!