Getting Financial Advice

Choosing your adviser is an important personal matter. Do some research and aim to talk with a few advisers before you decide. Some will do a better job than others.

There are plenty of advisers to choose from. Look for someone who

• will put your needs first
• works often with people in your situation
• will fit in with you personally.

Shopping around for an adviser may seem time-consuming or feel awkward, but it's much better to shop around now than have a bad relationship later.

How to find some names

Talk to your family, friends or ADF colleagues or anyone who's seen a financial adviser. Find out about their experiences and whether they have been happy with their advice. Ask about the good points and the pitfalls.

Only talk to advisers who are employed by or are authorised to represent a licensed advisory business. ASIC licences and regulates the financial advisory industry so that it operates efficiently, honestly and fairly. You can check licence details,or see if ASIC has banned someone from advising, for free through its consumer website FIDO or by phoning 1300 300 630 (or +61 1300 300 630 if you are posted overseas). Licensing gives you more protection if something goes wrong, including the right to a free and impartial hearing of consumer disputes.

Start with the financial services guide

Your advisory business worksheet

	Advisory business A	Advisory business B	Advisory business C
Name of advisory business
Name of AFS licence holder if different
Owned by or associated with any other companies?
Services offered Seems relevant to your needs? Yes/No Products restricted in any way? If yes, how? For example, they recommend only their own brand or their parent company's, or limited range?
Fees and charges Initial advice fee? How are advisers paid? For example salary only, salary plus bonus on sales, commission only

Phone each business and ask them to send you their financial services guide. All licensed advisers must produce one. If they don't send it, cross them off your list straight away.

Use the advisory business worksheet to collect key information about each adviser, so you can easily compare their services and costs. If you can't find the answer in the financial services guide, make a quick phone call to find out.

Who owns the business?

Ownership of the business can affect the services and products you're offered. For example, an advisory business may be allowed to offer only the parent company's products.

Many advisory businesses are owned by major financial institutions like banks, fund managers and life insurance companies. Even if they operate under a different name, the financial services guide will tell you if they're owned or associated with other companies. Only a few financial advisory companies are independently owned.

Services offered

Check if the services offered cover your needs.

For example, product restrictions can affect you. We've already mentioned that some businesses are limited to products issued by themselves or their parent companies. Other businesses may offer a wider selection, but may not cover the whole market. This restriction can be especially important with super, because the adviser may not cover your fund. If your potential adviser is not allowed to give full advice about your fund, it may be difficult to advise you. (For example, many advisers don't advise about industry funds, see ASIC's free booklet Super Choices.) While this isn't an issue for ADF personnel who are automatically placed into Military Super, if someone in your family who isn't in the ADF is making a decision about super it may be.

Fees and charges

You will often pay a once-off fee for getting advice.On top of that fee, most advisers get paid commissions and bonuses on financial products you buy. Often they could earn more if you buy a particular product compared with another that could be just as good or even better. This can set a up a conflict of interest between what's good for your adviser and what's good for you. (The law deals with this potential problem by requiring advisers to manage conflicts and also to tell you about all commissions.)Good advisers put your interests first anyway, but bad advisers may not. We'll come back to this issue when we discuss the products your adviser recommends below.

What if an adviser calls you?

Take care if you get called out of the blue. The caller may be selling advice or products that do not suit you or may be a scam.

Telemarketing or 'cold calling' potential clients breaks the law

• if the caller has no licence
• if the caller tries to sell you investments or financial products without following strict legal safeguards.

Even if a licensed adviser is calling you to come in and get advice by following all the steps we outline in this website, please take care. Think first about what you need, and see other advisers as well. With telemarketing, the salesperson has selected you; you have not selected them.

Setting up the first meeting

Contact the business and make an appointment to talk with one of their advisers. Ask to speak with an adviser, not a junior employee, and say you'll need about 30 minutes.

Say that you're looking for an adviser who would best suit you, and you don't want any advice or to fill in any forms or make any commitments at this stage.

For the first meeting, you'll need

• your notes on your financial goals and what you want from the adviser, and some brief information about your financial and personal situation. (This will help the adviser explain what they can do for you. You won't need all your paperwork now, because this meeting is intended for you to get to know more about the adviser, not for the adviser to find out all about you.)
• a copy of the questions we suggest you ask, see 'Questions to Ask' below.
• some notepaper to write down the answers.

What to listen for

A good first meeting will involve each of you sharing the conversation.

Begin by saying you are looking for an adviser, and you feel they may be able to help you, but you won't be making up your mind till you've seen 2 or 3 more. Say that you may make some notes to help you remember things. Invite the adviser to give you anything in writing that will help answer your questions.

You should get the opportunity to hear about the adviser's experience, the kind of people they advise, the kind of financial products they advise on, and their qualifications.

Pay attention to important clues about the adviser. Do they

• make you feel comfortable about asking questions?
• encourage you to take your time?
• want to understand your situation thoroughly before giving any advice?

Being talked at, put under pressure or told there's only one right way to do things is not a good sign. You're looking for an adviser, not a salesperson.

Questions to ask

Here are some suggested questions to keep the conversation going, with some comments about what to listen for. Choose one or two from each section, as you may not have time to ask them all.

What you need	Relevant questions	What to listen for
Personal experience in successfully advising people like you	How long have you been giving financial advice?	The more experience, the better. If less than 2 years' experience, ask: 'Will anyone else in the business take a look at the advice you give me'?
	What kind of clients do you mostly see? What are your clients mostly trying to achieve?	People with concerns like yours, for example, experience in dealing with ADF members.
	Do you take a special interest in any particular types of financial products?	Experience in the products you're interested in: for example, insurance, super, retirement income products, shares, managed investments
Someone who puts their client's needs first	How do you go about understanding a new client?	Aims to get a full picture of your circumstances and needs. Will ask you a lot of questions. Will probably need a separate appointment to do this
	How do you deal with a client who may have conflicting financial objectives?	Will explain and discuss choices with you. then does research and prepares advice for you to take away and consider
Qualifications relevant to advising	What qualifications do you have?	Qualifications in finance, economics, accounting, or financial planning
Reasonable fees	How much is this advice likely to cost?	Clear explanation of fees and commissions the adviser receives, plus general explanation about any likely product fees
High professional standards	How do you keep up to date with everything that's happening?	Attends courses and training run by universities, FINSIA, Institute of Chartered Accountants in Australia, CPA Australia, or the Financial Planning Association. (Not just in-house marketing seminars.) Member of ICAA, CPA Australia, FPA, stockbrokers' professional body, FINSIA, etc

Get the adviser to do most of the talking but keep them to the point. Ask open questions like 'what experience do you have?', and avoid questions that just have a yes or no answer. Query anything you feel unsure about.

How to decide

After you've met all your possible advisers, compare how each adviser answered your questions. Note each adviser's strong and weak points. Score each adviser from 1 to 5 against each heading on our list of 'what you need'.

Give a score for how you feel overall about being free to ask questions and whether you got a clear answer. Feeling pressured or uneasy can be warning signs that an adviser won't work out for you. See who gets the highest score. Remember you're comparing advisers, not comparing their advice.

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