As ADF members you know the importance of relying on expert advice when making decisions. When it comes to investment decisions, you may decide to use a financial adviser; and if you do, it pays to do some research to ensure you find one that’s right for you.
ASIC’s recent ‘shadow shopping’ research (Report 279 Shadow shopping study of financial advice) underlined the importance of shopping around before you engage an adviser.
Look for an adviser with experience and expertise. Don’t just rely on recommendations of friends or family. Professional associations such as the Financial Planning Association and CPA Australia can provide a list of advisers in your area.
Once you have a list of firms or advisers names, phone them to find out about their business. Explain that you want to talk about their services but not make a commitment at this stage. Also visit their website to make sure they have an Australian Financial Services licence and get a copy of their financial services guide.
ASIC’s shadow shopping research found that people can be swayed by an adviser’s confidence, approachability and friendliness, and find it difficult to assess the quality of the advice they receive. So it’s important to focus at the outset on the services an adviser offers. Here are some questions you can ask an adviser, and tips about what to listen for.
- How long have you been giving financial advice? You may prefer someone with more than 5 years experience.
- What type of clients do you mostly see? Are the clients in a similar situation to you?
- What investments do you advise on? What about the investments I currently have? If the adviser is restricted to certain types of products they may not be able to advise on your current investments. Make it clear whether you want comprehensive advice or limited advice about an existing investment.
Puts client’s needs first
- What information will you need from me? An adviser should ask about your income and expenses, what you own and what you owe, your dependents and your financial goals, both short and long term.
- How do you deal with a client who has a few different financial objectives? An adviser should help you prioritise your financial objectives, explain and discuss choices with you and develop a realistic strategy to achieve your objectives.
- What qualifications do you have? A diploma or degree qualification in finance, economics, accounting or financial planning is desirable. Also look for professional designations such as ‘Certified Financial Planner’.
- How much will it cost and how are you paid? A fee-for-service model charges a set amount for a specific piece of work. Some advisers are paid a mix of fees and commissions. If they charge ongoing fees, you should expect regular reviews. However they charge you, make sure you understand completely by asking lots of questions, especially around commissions.
For more information on finding a financial adviser, see ASIC’s consumer website moneysmart.gov.au
Australian Securities and Investments Commission