Whether you are just starting out in your career or nearing retirement, self-employed and running a practice, or working with an employer, actively managing your finances is necessary in preparing for your future. Doing so however, can be intimidating or difficult for someone who may not have a background in finances, or isn’t already well versed in opportunities that may be available to them. Therefore, anyone looking to review or manage their assets & liabilities, income & expenses and plan for their financial future, could benefit from the services of a financial adviser.
A financial adviser works to understand your individual situation and your needs, helping you to set realistic financial goals, ultimately advising you of a plan to achieve them, and supporting you along the way.
But not every adviser will be suited to your needs. A relationship with a financial adviser is one which involves a great deal of trust. When enlisting their services, you must take the time to choose the financial adviser that is right for you, from both a professional and personal point of view.
Putting your financial future into someone else’s hands could be a daunting prospect. But simply knowing what you’re looking for can help ease some of those stresses. There are a myriad of questions you can ask an adviser to confirm their suitability in meeting your needs, the way they operate, how they charge and the reasons for their advice. However, below are some of the questions you should be asking your financial adviser before you sign up, divided into two categories – legalities & qualifications and personal suitability.
Legalities & qualifications
What are your qualifications?
Financial advisers in Australia must have completed an approved Bachelor degree, equivalent, or higher. Subject to when they were first authorised, they must also complete a year of supervised experience, and all advisers must sit an exam set by ASIC. If your financial adviser is explaining the tax implications of their financial advice, they must also be registered with the Tax Practitioners Board as a tax adviser, or be a registered tax agent.
An adviser must provide you with their Financial Services Guide (FSG) which will detail their qualifications and specific areas they can advise you in.
What is your representative number and who holds your Australian Financial Services License (AFSL)?
An AFSL is required by Australian law to be able to conduct a financial services business. Every financial planner must be authorised by an AFSL to be able to provide advice, and if they’re not, that’s a sure-fire sign that they’re not the right financial adviser for you, or for anyone else. An Authorised Representative Number, along with the listed relevant qualifications are important, as they indicate to you that the adviser is legally able to provide advice on specific financial planning areas and can recommend the products related to these areas. It is a way of verifying that they understand the ins and outs of the product, the risks involved, and why the recommendations are in your best interests.
Are you (or your AFSL holder) associated with the people, products or businesses you’re referring me to? And do you get any payments or kickbacks for any of the products you recommend?
Any referrals made by your financial adviser should be purely professional and it’s important to know whether there are any conflicts of interest.
As a part of their services, your financial adviser may recommend external products and services to you. However, any conflicts of interest must be disclosed. That is not to say that a benefit for your adviser indicates the reference is bad, perhaps they have partnered as they trust each other. Ultimately, all decisions made by a financial adviser should be made in your best interest and not theirs. A good financial adviser will recommend you to the right place, regardless of any potential existing relationships they have.
Please note: You can validate the answers to the above questions using the Representative Number on the Financial Advisers Register as well as any bans or disqualifications made against the Financial Adviser by ASIC.
Who is your typical client?
Now that you have confirmed this financial adviser is qualified, legally able to practice and putting your needs first, it’s time to decide if they’re the right fit for you personally.
Asking about their current client base is an important starting point in determining if they can meet your personal needs. You should listen to the circumstances and objectives of the adviser’s typical client, as it may indicate whether the adviser is experienced giving advice to people in similar circumstances as yourself.
How can you help me achieve my goals?
When you are searching for a financial adviser, it is useful to have an idea of your financial goals, and if you don’t, the adviser should be able to help you through the process of determining where you want to get to financially. The adviser should be able to tell you in general:
- How they will gain 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 processes involved in achieving them, and;
- Other services the business can provide – for example, does the business also offer accounting services that may be able to assist you to prepare your tax returns or advisory for your business.
The adviser should also explain how to amend your goals if they are unrealistic or not achievable, working with you to find a satisfactory result.
To be able to present you with the specific advice on how the adviser will help you achieve your goals, they will need to issue you with a Statement of Advice.
How often do you communicate with your clients and what sort of information can I expect?
Depending on the advice itself and whether it is part of an on-going engagement, the adviser should tell you how regularly you could expect to meet, where they provide reporting on your investments and discuss whether your circumstances have changed (and provide advice accordingly if they have). It’s your money, you deserve to know what’s happening with it.
What is the length of your typical client relationship?
The length of a relationship is often a signal of its strength, and this is particularly true when it comes to financial services. If the financial adviser has a low client turn-over, chances are, they are satisfying the client’s needs and putting the client first.
You work hard for your money, you don’t want to entrust it to just anyone. You should treat choosing a financial adviser with the same careful consideration that you apply to all major financial decisions. Take your time, research and make sure the adviser you choose is someone you can trust.
If you’d like to discuss your current situation or any points in this article further, please contact one of our friendly and knowledgeable Financial Specialists or give us a call on (03) 9835 8200.
DISCLAIMER: GENERAL ADVICE ONLY
The information provided in this post 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.
Please seek professional advice or do you own research for an appropriate investment.
Author: Kate Rhodes, Associate Director at Accru Melbourne. Accru Melbourne is an award-winning financial services firm. Accru offer a wide range of financial services and are dedicated to providing excellent customer service and proactive advice. If you would like to discuss your personal or business financial needs, please contact the team on (03) 9835 8200 or email firstname.lastname@example.org. Accru Wealth Management hold their own AFSL (238520).