10 Questions to ask your Financial Advisor

What should you be asking your Financial Advisor?

Choosing a Financial Advisor that is right for you can be a hard and overwhelming decision, that’s why it’s important to ask the right questions before you make any commitments. Below are some questions that can help in your decision making.

What are your qualifications?

The Financial Advisor should have at least a Diploma of Financial Planning (RG146) however the more qualified the Advisor, the better. A Graduate Degree in Finance, Economics, Accounting or Graduate Diploma of Financial Planning is desirable.

What is your representative number and who holds your Australian Financial Services (AFS) license?

Keep this information for later.

Are you authorised to provide advice on the products you are recommending to me?

It’s important to know that the Advisor is legally able to provide advice on the products they are recommending to you, it’s a way of verifying that they are aware of the ins and outs of the product and the risks involved.

Are you (or your AFS license holder) associated with the people, products or businesses you’re referring me to?

Any referrals made by the Advisor should be purely professional, and it’s important to know whether there are any conflicts of interest.

Please note: You can validate the answers to the above questions using the Representative Number you wrote down earlier on the Financial Advisors Register as well as any bans or disqualifications made against the Financial Advisor by ASIC.

Who is your typical client?

You should listen to the circumstances and objectives of the Advisor’s typical client, as it will tell you whether the Advisor is experienced giving advice to people in similar circumstances to yourself.

Do you get any payments or kickbacks for any of the products you recommend?

It’s important to know if there are any incentives or conflicts of interest involved in the products that the Advisor is recommending. This can help you determine whether the recommended products are in in your best interest and not theirs.

What are the risks involved in the products you recommend in the short and/or long term?

The Advisor should clearly explain the risks involved in the investments and ensure they are aligned with your own risk tolerance. The Advisor should also provide you with a product disclosure statement, which outlines the risks and costs associated.

How can you help me achieve my goals?

The Advisor should tell you:

  • How they get an understanding of your specific needs and circumstances.
  • How they will develop a strategy for you.
  • How they will prioritise your goals and explain the choices and process involved in achieving them.

The Advisor should also explain to you how to amend your goals if they are unrealistic or not achievable.

How often do you communicate with your clients and what sort of information can I expect?

Depending on the advice itself and whether the advice is on-going, the Advisor should tell you that you will catch up regularly to:

  • Check whether your circumstances have changed (and provide advice accordingly if they have).
  • Provide regular reports about the investments you hold.

For how long do your clients typically stay with you?

The length of a relationship is often a signal of its strength. If the Financial Advisor has a low client turn-over, chances are, they are satisfying the client’s needs and putting the client first.

If you’d like to discuss you current situation or any points in this article further, please contact one of our Financial Specialists today. Alternatively, you can complete your details below and we’ll be in touch or give us a call on (03) 9835 8200.

DISCLAIMER:  GENERAL ADVICE ONLY

The information provided in this blog is general in nature. It has been prepared without taking into account any person’s individual objectives, financial situation or needs.

Before acting on any information in this blog, you should consider its appropriateness to you, having regard to your objectives, financial situation and needs or seek professional advice from a financial advisor.

Accru are not recommending any investment or product, the investments mentioned are examples only. Please seek professional advice or do you own research for an appropriate investment.

About the Author
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Joshua McGrath , Melbourne
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