Choosing a Financial Planner
When you seek financial advice it’s important to know that your Financial Planner has the appropriate skills and experience and that the Australian Financial Services Licensee he or she is associated with is able to deliver the ongoing services you need. The following questions may help you to assess the merits of a Financial Planner:
1. Do they have a Financial Services Guide (FSG)?
All Financial Planners are required by law to produce an FSG which gives you an explanation of their fee structure and the services they offer.
2. Are they, or their company, licensed by the Australian Securities and Investments Commission (ASIC)?
An authorised Financial Planner must meet the knowledge, skills and integrity standards required by ASIC.
Proper advice will require securities (eg; shares & managed funds) to be discussed. Only those licensed under Corporations Law are authorised to do so and this imposes certain practice requirements on the license holders and their representatives. It is another safeguard, backed by criminal penalties for breaches. Be aware that some Planners can only advise on insurance products or a very limited range of securities products.
3. Do they hold Professional Indemnity Insurance ?
In some cases, you may be able to take legal action where advice was flawed. This type of insurance ensures that if you are successful, there are funds to compensate you for your loss.
4. What are their qualifications and experience?
Check that the Financial Planner has appropriate qualifications. Ask how long they have been a Financial Planner and what types of clients they typically work with. Whilst a qualification does not guarantee the standard of work, it indicates that the person has been taught and examined on a range of issues needed to provide you with correct and comprehensive advice.
5. Are they a member of the Financial Planning Association of Australia ?
The FPA requires it's members to subscribe to and obey the rules of professional conduct and code of ethics. A Certified Financial Planner (CFP) is the highest level of professional designation offered by the FPA and is an internationally recognised qualification. CFPs must subscribe to a code of ethics and professional conduct rules and are subject to disciplinary procedures for breaches.
6. What services do they offer?
Does the Planner only offer investment advice or do they offer total financial solutions including insurance, tax, estate planning and so on. Do they have formal ongoing review services? The Financial Planner’s FSG will list the services they provide.
7. How are they paid for their services?
Find out if they operate on a fixed fee, brokerage or commission basis. Ask them to explain all upfront, ongoing and exit fees which you might have to pay (directly or indirectly).
8. Do they have access to a range of investments from different companies or do you work for one specific company ?
Your Planner should be able to provide advice on a range of products from a range of companies.
