How to choose a financial advisor

With all the negative media attention and horror stories from the global financial crisis it can be hard to know who you can trust when it comes to seeking financial advice. Here is my how to guide when it comes to choosing a financial advisor.

1)     List a few possibilities

This could come from asking a friend or relative who they used, talking to your accountant, using a google search or looking for influencers on social media.

2)     Check the ASIC financial advisers register

ASIC is the government regulator and they have a public register of all financial advisors including those serving in Brisbane. The benefit of the register is it tells you the adviser’s experience and employment history, the product areas they can provide advice about and whether the adviser has been banned or disqualified from giving advice.

3)     Check their Financial Services and Credit Guide

The Financial Services and Credit Guide is the advisors advice disclosure document, much like a product disclosure statement. It will tell you what services they offer, how they charge, any commissions they may receive and your rights.

4)     Check their qualifications and experience

While set to change right now the minimum training standards to provide financial advice is an RG146 course and to hold an Australian Financial Services licence, or be an authorised representative of one. One way to compare advisors is to look at their designations, qualifications and experiences for the individual advisor on their Financial Services and Credit Guide.

5)     Check what products they can advise on

What products and services an advisor can assist you with will depend on their level of training and often which license they are an authorised representative to. This information can be found in their Financial Services and Credit Guide but if you have trouble finding it may be easier to ask the advisor prior to booking a meeting.

6)     Research what sort of clients they typically work with

While financial planners can provide advice in various areas they often specialise in one particular area. For example while I provide advice from wealth accumulators to retirees I work more with working families between 35 – 45 than anyone else. This may have some benefit so check out their website and online content to see where their attention is focused.

7)     Look for reviews and testimonies

Another good way to see what areas of advice an advisor may specialise in reviews and testimonies also give you an insight to what sort of client experience you should expect to receive. For example I display my client testimonies online in both written and video format.

8)     Check the fees

The cost of advice will depend on the complexity, what advice is being provided and the company the advisor works for. It is difficult for an advisor to provide you a quote prior to your first complimentary consultation meeting but they should be able to give you an estimate. A fee schedule may also be disclosed in the Financial Services and Credit Guide.

9)     Book a complimentary consultation to discuss your needs and financial objectives.

Look for signs of a good advisor who have the following traits,

Asks you about your circumstances and helps you identify goals

Has explained the scope of advice they can provide advice on based on the amount you are willing to pay

Is happy to explain complicated financial concepts until you understand them

Leaves you feeling confident the adviser understands your situation, needs and goals

Leaves you feeling clear about the service you are receiving, what the advice will and won’t cover and how much it will cost.

Avoid advisers who

Pressure you into signing documents you haven’t read or don’t understand

Doesn’t ask about or listen to what you want

Seems to be pushing one solution or product, regardless of your needs

Doesn’t explain why a particular strategy is appropriate for you

Doesn’t leave you feeling comfortable to ask for explanations or leaves you feeling intimidated.

Seeking financial advice is one of the best things financial decisions you can make and it is unfortunately a few bad apples has tainted the profession. My hope is by taking these steps you feel comfortable about seeking advice. If there are any questions I could answer please do not hesitate to contact me through here.

What you need to know

Source Money Smart, Financial advice and you.

Constancy Wealth Management Pty Ltd ABN 51 168 427 361 trading as Constancy Wealth is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.

This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information