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So, you’ve decided to see a financial adviser. With around 16,000 financial advisers and planners listed on the Australian Securities and Investments Commission (ASIC) Financial Advisers Register, you’re not short of choice. Yet too much choice can be daunting, especially if you’ve never consulted a professional adviser before.
You are also not alone. An estimated 12.4 million Australians have unmet advice needs, according to the Investment Trends 2022 Financial Advice Report.
Whether your financial affairs are simple or complex, it’s important to take time selecting an adviser who is not only well qualified but the right fit for you. Following these five steps will help you make the right choice.
Step 1: Where to look for an adviser
A multi-pronged approach works well when you are starting your search.
- Ask trusted friends, relatives and work colleagues for recommendations. While a personal recommendation is not enough on its own to select an adviser because everyone’s needs are different, it may help you whittle down the list of advisers in your local area and give you confidence to make that initial call.
- Do an internet search for financial advisers near you. Check their website and social media pages to see what services they offer, if they have particular expertise or encourage certain types of clients, and comments from happy or dissatisfied clients.
- Use the ‘find a planner’ service offered by the Financial Advice Association of Australia (FAAA). The online search function allows you to narrow your search by location. Once you have a shortlist, click through to each adviser’s website to find out more.
- Financial Advice Association of Australia (FAAA) Find a planner
- Check SuperGuide’s list of independent advisers, which we believe is the most extensive list available.
Some advisers have expertise in areas such as retirement planning, SMSFs or aged care. Others might work with occupational groups such as teachers, doctors or small business operators.
An adviser can also help younger clients with guidance on budgeting, cash flow management and investing, perhaps in preparation for buying their first home, building an investment portfolio or starting a business.
Once you have a shortlist of advisers, it’s time to do some due diligence.
Step 2: Are they licensed?
Before you approach an adviser, check they are qualified and licensed to do what they say they will do.
The financial services regulator ASIC has an online financial advisers register of individuals who are authorised to provide personal advice on investments, super (including SMSFs) and life insurance.
The register will tell you:
- The adviser’s qualifications, experience and employment history
- The types of products the adviser can provide advice on
- If the adviser is a member of a relevant professional body or industry association
- Whether the adviser has been subject to disciplinary action by ASIC
- The name and number of the Australian Financial Services (AFS) licence holder who employs or authorises them to provide advice
- Details about who owns or controls the licence holder.
This might seem like a dry and uninteresting list, but it could potentially save you money and heartache, so don’t be tempted to skip this stage.
For example, the last bullet point could alert you to potential conflicts of interest if, say, the owner of the licence holder is a bank and the adviser’s only recommendations are products issued by that bank.
If you can’t find an adviser’s name on the register it means they are not operating under an AFS licence, so don’t do business with them. If anything goes wrong, you have no legal protection.
Step 3: Read their financial services guide
Advisers’ websites typically present a positive, friendly face and it can be difficult to find any reference to fees or who owns the business. But if you scroll to the bottom of the screen, you should see a link to their financial services guide (FSG). If you can’t find it there, call and ask for a copy.
You should read the FSG of any adviser on your list before you follow up with a visit. It will tell you:
- What services they offer
- How they charge
- Who owns the company that employs them
- If they have links to a product provider such as a bank, fund manager or life insurance company
- Their AFS licence number.
This information should help you formulate a list of questions to take to your initial consultation.
Step 4: Questions you should ask an adviser
Most financial advisers offer a free, no obligation initial consultation. Make use of this to visit at least three advisers on your shortlist. Take the same list of questions to each adviser and write down their answers, so you have a firm basis for comparing them.
For couples, it’s a good idea if you both attend these initial meetings. In a practical sense, it means one of you can concentrate on taking notes. But it will also help the adviser get a clear picture of your joint financial situation, your goals and any points of disagreement that may need to be negotiated.
Here are some questions to ask:
- What are your qualifications? As well as checking that an adviser is licensed to provide personal advice, also look at length and type of experience, such as where they have worked and in what role.
- What do you charge? Advisers may charge on a fee-for-service basis, a percentage of the amount you invest, or a combination of the two. There will typically be fees for preparing an initial statement of advice (SOA), fees for implementing advice, and ongoing monitoring and review. Ask for a breakdown of all fees and charges.
- Are there any other fees and charges you haven’t mentioned? Ask for an overall estimate of fees you will be charged on a dollar basis (rather than a percentage figure) so you can compare like with like when you have visited all the advisers you are considering.
- How are you paid? Is the adviser on a fixed salary or do they receive bonuses or other incentives for selling you products?
- What will I get for my fees? You may want to know what information will be in your statement of advice (SOA), how frequently they will monitor and review your investments, and whether you will get written reports or regular updates. The Royal Commission found that many advisers charged ongoing advice fees without providing any ongoing advice or service. If you don’t want ongoing advice you don’t have to pay for it.
- Can you advise me on my existing financial products? You probably already have money in super and perhaps have other investments outside super. Some advisers may want to shift your super into products on their approved list, or not be able to advise you on products not on their list. It’s important to know if the advice you will receive is likely to be conflicted, when what you want is an adviser who can offer the best products for your circumstances. Be wary of advisers who try to sell you in-house products from the bank or parent company who employs them.
- How will you communicate with me and how often? If you are looking for an ongoing relationship, you need to know if there will be regular progress reports, face-to-face meetings, market updates or SMS messages and if you can call your adviser when you need to.
- Are you independent? If possible, look for an independent financial adviser who is free of conflicts of interest.
Don’t feel uncomfortable about asking lots of questions. It’s a necessary part of the process if you are to separate the professional financial advisers from product salesmen and women.
Also be wary of advisers who receive referral fees from other related professional services. For example, an adviser may recommend you set up an SMSF to invest in property, then refer you to a property developer to help you find an investment property, an accountant to help set up your fund and a lawyer to take care of the legal requirements. If an adviser offers referrals, it’s important to understand if money or other incentives are changing hands.
Step 5: Watch for the (not so) little things
Fees and financial considerations are extremely important, but they are not the only thing that matters when choosing a financial adviser. The right adviser could be part of your life for many years and have a significant part to play in your future wellbeing. Like any long-term relationship, the little things count.
When you arrive at their office for an initial consultation, notice if they try to put you at ease and communicate in a way you can understand. Also note if they answer your questions openly or seem evasive or dismissive.
At your first meeting, as well as outlining their qualifications, experience and what they can offer, an adviser should also ask questions about you. To offer holistic advice, and not just products, they should ask about your current financial situation, your financial and personal goals and the scope of advice you are looking for.
The more information you can provide at this stage, the more likely you are to receive appropriate advice and an accurate estimate of their fees.
Ultimately, you want a qualified and suitably experienced financial adviser you feel comfortable doing business with. You also want someone who will put your needs first. The winning candidate may not be the cheapest, but they should offer fair and transparent fees for the services they provide.
Video: Finding a suitable financial adviser and making financial advice work for you
In the following video, members of the Profession of Independent Financial Advisers provide some insights into how to find a financial adviser that is right for you, and how to make the most of the financial advice process.
Transcript
How can you find a financial adviser that is right for you?
Neil Salkow, Roskow Independent Advisory
So there’s a lot of resources to find advisers – SuperGuide website, PIFA website and asking friends and family who have got good advice, not just who have seen an adviser, but who’ve really got outcomes, successful outcomes from the advice.
So that’s a starting point as to how to maybe go about finding them. From there I would say do your research. So do your research on the individual that you’re seeing, on the company that you’re seeing. Understand that the services being offered are truly the services you need, rather than… Advice is not homogenous, it’s not one size fits all.
So my view is try and find a firm that will tailor their services to you or understand what services you may need, and then only get those services if you only need a limited number of services.
Joe Stephan, Stephan Independent Advisory
Well, I think it comes back to, I think consumers really, and clients really want to know, families really want to know how do I select the appropriate adviser for me?
I think what you want to do is find an adviser that feels comfortable in your gut, a person that you really resonate with, that the approach that they’re taking with you is slow, and patient, and deliberate. That they’re illustrating value and being transparent about the costs of the advice really early.
And then they’re telling you that you should go and have a second opinion, that you should go and interview as many advisers as you want. And that there is a feeling of a lack of sales pressure that is going on. Because their process is not sales-centric, it’s value-centric. You will feel that if that is truly the case.
Naomi Horobin, Clover Financial Group
If you think you might get something out of some advice, just pick up the phone, call an adviser, have a chat to them, they will be able to talk to you about… get an idea of what you need help with, and whether they’re the right person to help you. And if they’re not the right person, point you in the direction of where you can get the sort of help that you need right now.
It’s really about having a conversation where we get to know you so that we can work out where you want to go, and what we can do to help you get there.
Daniel McGregor, Wealth Train
Different businesses are doing it different ways. I still like to offer people a first free appointment because most people haven’t had advice. It’s a daunting process, feeling that they’re going to come in and talk about money. It’s not something most people are comfortable with. They don’t know the process because they haven’t gone through it before.
So I’d encourage everyone to just reach out and engage with a financial adviser, have a conversation, and see if there’s something they can do to help, and start with an independent one.
Matthew Ross, Roskow Independent Advisory
Something else to think about. Go and ask your friends and family and your peers and other people who they’re trusting. Because I think that’s one of the hardest things for consumers to find someone they can trust.
And independence is just a ticket to the game. So then you got to, once you find someone that you feel like you might be able to trust, you’ve got to have that personal connection. So often we’ll encourage people to go and see two or three advisers.
It’s an important decision to make because you’re going to get very personal with them. You’ve got to be able to trust them. You’ve got to have that connection. So, yes, take action sooner, but ask others who they’re comfortable with. Ask your peers who they’re comfortable working with because there’s a good chance you’re going to connect with them too, because there’s a connection there. So money’s maybe something we don’t talk a lot about. And you don’t necessarily need to talk about money, but you can talk about who’s helping you with money, who’s helping you with your decisions and why.
Phil Thompson, Rise Financial
The first thing I would say for people is, get some advice because in my opinion, the future of advice are two things that advisers can really help people with.
The first one is one-off appointments, ad hoc information, understanding when it’s needed. I call it a financial checkup in my business where I sit down and help people understand what they’ve got, articulate their goals, let’s map out the future. And I do that with people every two or three years. So it’s something they can come in for, just a checkup, let’s understand what’s going on.
The second part is where you need an adviser to take on some responsibility for investments for you as well. So there’s a different relationship there. It comes at a higher cost, so there is an ongoing fee for that, but we’ve got to make sure it’s a worthwhile arrangement for those clients.
How can people make the most of the financial advice process?
Peter Humble, Rise Wealth
To engage in this process people need to be wanting to listen, they need to want to learn. Our process is designed around knowledge and education. And it’s not until people appreciate how much they don’t know, or appreciate that there are questions that need answers that then motivate them to seek advice, but also to pay for it.
Matthew Ross, Roskow Independent Advisory
To make the most of the process go in with an open mind and give the information. So in my mind, a great adviser asks good questions, great questions, deep questions, honest questions and hard questions. So find someone that’s got the guts to ask some really personal questions.
And once they do that, give them the information, trust them, see what they do with that information, but really buy into it. If you hold back on the information, then you’re almost holding back on the value you get out of the process. It’s first of all, you need to find someone good questions, but then engage in it.
Amir Salehi, Planning Wealth Independent Advisory
We start from the starting point, which is, what is really important to them and what are those goals that they want to achieve, and that they need planning for, and then where they are. So when we know where they are, when we know what are those goals that they want to achieve and what’s really important to them. So what is really important to them is more than money. So goals change. Their values, what is really important to them doesn’t change.
So when we know all that, how to get there becomes much easier. Sometimes even clients can work it out themselves or with their accountant they can do it. But getting that one picture, one pager sort of a roadmap is the best way to start.
Dennis Maddern, Maddern Financial Advisers
Well I think the key thing is really what are your goals? Is to help them clarify their goals. The rest of the stuff, name, rank and serial number is pretty much straightforward. How much have you got in super? Do you have income protection? How much you’re paying in tax. I think they’re basic sort of questions.
But the big thing are the goals. Where do you want your children to go to school? How much money do you want to have in retirement? Do you want to build wealth through bricks and mortar, or do you prefer shares? Or whatever it may be. Or do you want to just plan to eat vanilla slices in France and travel on a regular basis?
Whatever the issue is, we’re here to help you as to your unique needs. So because we’re independent, we have no product to push, we have no agenda to push. It’s really all about you.
Susannah Kulincevic, Brocktons Independent Advisory
Mostly what I find is that people, when they come to me for advice, is that they’ve got some idea of how things like superannuation can work, how there are certain rules about superannuation, but they’re not quite sure how those rules work. And more importantly, how those rules apply to them individually, or as a couple.
There are strategies that they would like to implement on their own, and they get to a point and they realize it’s too difficult, it’s too much, or it’s just beyond my understanding. And so that’s when they come to me for advice. I think at that point I’m talking to clients who have, roughly, they know what they want, and roughly they are on their way there, but they just need someone to give them a bit of clarity and a bit of direction.
Peter Humble, Rise Wealth
The idea that people can do this well and by themselves, there’s a small number of people. They’re very skilled and quite capable of putting together, and implementing, and executing, and then reviewing their own financial affairs. But quite honestly, I don’t believe that’s cost effective necessarily for those people. And the vast majority of people find the complexity of strategy, and product, just a confusing maze, a bit of a mess.
And then they need help, they want help to sort through it all. We’re not talking about comparing apples and oranges. We’re comparing a banana and a motorbike in lots of ways. Should I commute money out of my superannuation to pay out the remaining mortgage?
That’s not a process of comparing financial products that’s actually comparing different strategies all together. So, yeah, it’s a banana versus a motorbike versus a swimming pool. That’s what’s comparing financial strategies is really like.
But the ability to do that from a completely objective basis; I’ve got absolutely nothing to gain. I don’t work for anybody else. I’m not here to sell you products. We’re just here to spend time together perhaps 10 or 15 hours over the next couple of months working through the questions that you seek answers to.
Rick Horvat, Horvat Financial Advisers
For us, we really try to hone in on why someone wants to do something. So it’s really trying to, again, break down why they believe they want to achieve something or do something. What’s really driving them to that outcome?
An example might be a client coming in saying, “I want to buy an investment property.” Well you don’t… Why? What’s the investment property? It typically, and without putting words into people’s mouths, it’s about having enough capital at the end of the day to substitute and generate an income from that, that substitutes a wage when they decide to have the option of stopping to work. As you mentioned before; retirement. But we have to try and get that out of the person and out of the client. And so, if someone’s looking at go seeing a financial adviser, it’s really trying to understand what they’re trying to achieve and why they’re trying to achieve it.
Amir Salehi, Planning Wealth Independent Advisory
I think clients normally think of a return too much, a historical return, or how much return do I get? And they put too much emphasis in that area, I think. But what is really valuable to them and what we see as value to clients is stopping them from doing simple mistakes. And so that is the real advice, to keep them on track to their goals and making sure that they don’t make decisions based on their emotions.
Philip Harvey, Construct Wealth
One way that I can say this to emphasize how valuable financial advices is, is to say, I really wish when I was 30 I had seen a financial adviser. I think a financial adviser can obviously help map out all of the really big decisions, but they’re probably not the ones that will really impact your retirement planning in the end. It’s actually all of the small decisions that you’ve made along the way where, if you had have had someone sitting beside you saying, “Actually, don’t do this, or don’t do that.” Or conversely, “Yes, do this or that.” There to guide you to make the better decisions.
Great article! I like that what you have emphasized above to choose a financial planners Melbourne who is qualified and licensed. They can help in assessing your current financial health and help you create a financial plan that is best for you.