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The importance of choosing a qualified and registered financial adviser

The recent news about the alleged misconduct of a “financial adviser” in allegedly defrauding millions from clients is horrible. For those who have lost, or stand to lose, so much of their hard-earned money the toll on their mental health and their families wellbeing is unimaginable. This sort of thing just should not happen. 

What is often, frustratingly, overlooked in the media coverage is, in this recent instance and others like this, the individual purporting to be a financial adviser is not currently licensed to provide financial advice. They never have been.   

There may have been clues that could’ve helped these people avoid these terrible circumstances. Did you know that anyone who gives financial advice in Australia must operate under an Australian Financial Services Licence, and be registered with ASIC? 

Unfortunately, it’s too late for any tips to assist those investors that have already been duped and we hope the regulators and courts will assist them with a fair outcome and justice will be served.   

We’d hate for headlines like these to deter people from seeking financial advice.  But, at this point, it is fair to ask why get financial advice? 

There has been a lot of research into the value of financial advice with common findings showing advised clients experience an increase in confidence in their financial wellbeing, less financial stress and greater peace of mind with regards to their financial future when compared to non-advised consumers.   

A 2015 white paper from IOOF on ‘The True Value of Advice’, found that those who receive ongoing financial advice are 22% more likely to feel as though they are living their ideal life.   

When it comes to getting financial advice, the value is clear when you can find someone you trust to work with. 

So how do you choose a financial planner? 

Like choosing any service provider, it can be helpful to start your search by getting a referral from family, a friend or colleague.  

It is important to check that they’re registered with ASIC and have a current licence. You can use the ASIC financial planner register to double check a prospective planner’s qualifications, experience and work history.  

The financial planners register gives you information on:  

  • The financial planner’s areas of expertise  
  • Their industry body membership  
  • Their Australian Financial Services Licence (AFSL) 
  • Whether the planner has had complaints or received disciplinary action in the past  

Don’t do business with a financial planner, financial adviser, investment advisor, or broker, without first checking and verifying their credentials.   

Registered financial advisers operate in a heavily regulated area. The regulation is ultimately aimed at maximising the protection of consumers. The advisers must abide by a code of ethics, meet minimum education standards, have professional indemnity insurance and are heavily scrutinised by ASIC. By ensuring the adviser you choose to work with is properly authorised you are increasing the oversight on the advice that you are provided and the protection you have if something goes wrong. Which means there is less chance of it ending badly for you. 

Once you’ve confirmed the bona fides of the adviser, the next important step is to arrange to meet face to face (or via Zoom in current times). You can investigate the services offered by an adviser, prior to the meeting, by requesting a copy of the planner’s Financial Services Guide. This outlines fees, services and whether the planner gets paid commissions or is associated with any financial institutions such as banks.  

 When you first meet an adviser, ask them about:  

  • their qualifications, main client base, and specialty areas  
  • What fees you will pay, how often and what you’ll get in return  
  • how they’ll manage your money  
  • how often you’ll meet  
  • what information you’ll receive and how often  
  • how they’ll consult you on decisions  
  • how they’ll monitor and manage your investments  
  • what commissions or incentives they receive from financial products, and how they’ll choose products to recommend to you?  
  • who’ll look after your account when they’re away  
  • how they’ll deal with complaints   
  • how to end your agreement with them (including any penalties or notice periods)  

A good financial adviser will work with you to understand your needs, set your financial goals, and create a plan to help you achieve them. If you don’t feel the adviser is addressing these points or is able to answer your questions satisfactorily, then it may be best to move on. 

Having someone you can work with as a trusted adviser is imperative to maximise your financial wellbeing. Hopefully the tips provided here will help you find the right adviser for you. 

Sources

(1) IOOF White Paper – The true value of advice Dec 2015

(2) AFA White Paper – Money Well-being and the Role of Financial Advice May 2016

The information in this blog post is general advice and does not consider your individual objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement. Should you have any questions please contact us on 02 9232 6800. 

I see my role as a financial adviser as a project manager and financial coach. It starts with helping clients articulate their vision of their future and success, understanding their challenges and complexities and their starting point.

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