Choosing a financial advisor: finding an advisor that fits you

Why is good financial advice so important?

In today’s uncertain economy, correct financial advice is absolutely essential. It can even mean the difference between poverty and prosperity. From managing business expenses, to investments, to your superannuation, the household budget and more, properly managing your money can be overwhelming.

That’s why it’s vital to choose the right financial adviser for your needs.

HOW DO YOU FIND THE RIGHT FINANCIAL ADVISER?

Once you've determined exactly what you need from a financial adviser, start searching for one who offers the services you're looking for. It's important to carefully consider your decision, as you will likely form a long-term professional relationship with your adviser.

As with most services these days, doing your due diligence online to find an adviser that clearly provides advice that meets your need is a start. Search for an adviser that can demonstrate they are experts on the specific advice you need, by way of the blogs they write on their website, the reviews they receive on Google, testimonials given by their clients and other content output they may have written for media, that gives you confidence in their knowledge.

Knowledge of the options after all is essential to you knowing that all avenues are being thought about, when determining what advice is best for you. Most importantly you want to avoid the adviser who gives a one size fits all advice.

INDUSTRY ASSOCIATIONS

Industry associations are another useful resource. With handy "find an adviser" services, industry associations can help you find a knowledgeable financial adviser in your area. 

These associations usually require members to participate in regular training and have a compulsory code of conduct.

Look for members that have demonstrated that they go above and beyond the industry standard. Certified Financial Planner is one designation that reflects personal educational achievement, as do related degree qualifications. Other designations like Financial Planning Association ‘Professional Practice’, also demonstrate a high commitment to quality, ethical advice. More about FPA Professional Practice click here.

USE THE FIND A PLANNER TOOL

To make your search for the perfect financial planner even simpler, the Financial Planning Association of Australia offers an easy to use tool.

The find a planner tool will help you find a financial adviser in your local area, who specialises in your specific financial needs. Access this innovative tool by visiting: www.fpa.com.au/findaplanner tool.

HOW TO CHOOSE YOUR FINANCIAL ADVISER

When you have a shortlist of financial advisers, ensure you check their history, qualifications and employment status before making your final choice. A convenient way to do this is looking up your adviser on the Financial Advisers Register.

The Register will tell you:

  • The adviser’s qualifications and experience
  • Which areas the adviser can provide advice about
  • Whether your adviser is a member of any industry associations or professional bodies relevant to financial services
  • The name and number of the Australian Financial Services (AFS) licence holder who authorises your adviser to dispense financial advice
  • Whether your adviser has been subject to any disciplinary action by ASIC

If an adviser does not have a valid licence, choose another adviser. By operating without a licence, the adviser is breaking the law and you will not be protected if things go badly.

READ THE FINANCIAL SERVICES GUIDE

When approaching a potential financial adviser, ask them for a financial services guide (FSG). This guide will tell you:

  • Which services your adviser will offer
  • Their rates, how they charge and whether they receive any other benefits or payments
  • The owner of your adviser’s company
  • If your adviser is affiliated with any product providers (i.e. many advisers are linked to banks, life insurance firms and fund managers – this can impact the services and products they offer)
  • Your adviser’s licence number

EXAMINE YOUR ADVISER’S EXPERIENCE AND QUALIFICATIONS

A financial adviser can be qualified to give advice after meeting minimal training requirements. To ensure you get the right advice for your needs, find an adviser with a degree qualification in financial planning and preferably look for Certified Financial Planners as well (CFP). The globally recognised highest qualification for Financial Planners.

ASK YOUR ADVISER ABOUT THEIR EXPERIENCE

Asking your adviser about their typical clients will help you decide whether they have the right experience to help you achieve your goals. For instance, does your adviser primarily deal with retirees, young families, or first-time investors?

The depth of your adviser’s experience is also important. For instance, a recently graduated financial adviser may be highly qualified, but may not be as experienced as an older adviser with fewer qualifications. 

CONTINUAL PROFESSIONAL DEVELOPMENT

For financial advisers, learning is a lifelong process. Like many other professionals, a vital part of a financial adviser’s job is keeping up with the latest developments in the financial industry. 

A good financial adviser should participate in regular training programs, such as courses or seminars, run by registered training organisations, professional bodies or industry associations. 

GETTING TO KNOW YOUR FINANCIAL ADVISER

To help you get to know each other better, the majority of financial advisers will offer a no-obligation, no fee initial consultation. During this session, explain your financial goals, your current financial situation and what you hope to achieve. 

Remember, this professional relationship could potentially last for years, and you are placing a great deal of trust in this person. So, if you don't feel it is working, keep searching until you find the right fit.

KNOW EXACTLY WHAT YOU’RE GETTING INTO

Before hiring your financial adviser, ask them for a comprehensive estimate of the cost of the advice. This way, you’ll know exactly what you’re paying and where the money is going. 

For example, these are some of the fees you may be charged when engaging a financial adviser.

First meeting with a financial adviser – this is often free. During this meeting, you’ll discuss your advice needs and the adviser will tell you how they can help. 

  • Statement of Advice (SOA) fee – If you continue with your adviser, an SOA will be prepared. This document includes the adviser’s understanding of your financial circumstances, financial goals, strategies to achieve these goals and information on any recommended financial products. 
  • Fee to implement financial advice – If you accept these recommendations, you may be charged for the advice. This fee covers the administration work involved. The amount reflects the complexity of the advice you receive, and the work required to implement the advice.
  • Continual financial advice fees - If you elect to receive ongoing advice, this fee will cover:
  • Regular reviews with your adviser
  • Regular investment portfolio reports
  • Access to your adviser via phone or email
  • Newsletters
  • Invitations to seminars

SIGNS YOU’VE FOUND A GOOD FINANCIAL PLANNER

Firstly, a good financial adviser understands that no matter who they work for or are licensed through, their ultimate fiduciary and legal responsibility is to you, the client. They should also be a member of an industry association, such as the Financial Planning Association, and follow their code of conduct.

They will also explain the financial planning process, their upfront and ongoing fees, and about their experience and background in financial planning during your first meeting. However, if you feel they’ve missed something important, don’t hesitate to speak up.

Contact us

For more advice on choosing a financial adviser to suit your needs, contact the friendly team at Yield Financial Planning today. 

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