Going to see a Financial Planner can appear daunting, especially if you haven’t sought professional financial advice before, but it could be a hurdle worth getting over if you want help with putting together a tailored financial plan.
People often visit a Financial Planner for the first time when they are seeking a mortgage, and then they focus on wealth creation later – but it could be worth building a relationship with your Adviser early on. A good Planner should be able to help you take a holistic approach to your finances, and advise you on other aspects of your finances, such as investing or superannuation, as well as just your mortgage.
Not sure how to go about choosing the right Financial Planner? Here are six questions to ask to help you decide if they are right for you:
1. Expertise: Are you qualified and experienced in giving financial advice?
Let’s face it, if you’re going to see a Financial Planner it’s because you’re looking for some expert guidance – so you want to be assured that your adviser knows what they’re talking about.
Check they are registered with a professional body such as the Financial Planning Association (FPA) or Association of Financial Advisors (AFA), and check their work history, experience and qualifications – including that they hold an Australian Financial Services license and are permitted to give advice.
2. Independence: Are you aligned with an institution?
Bear in mind this doesn’t always mean that the more experienced adviser is necessarily the best fit for your needs. According to a recent news report, around 14,000 of the 18,000 Financial Planners in Australia are aligned with, or directly employed by, a bank or insurer which means their product range is most likely limited to certain providers.
Not all Advisers cover all products and providers, so ask about the range and extent of their advice so that you are aware how much of the market they cover.
3. Clients: What is your current client mix?
Asking about the types of clients you have doesn’t mean you’re being nosy; it’s a good indicator as to the type of experience your adviser has in dealing with the financial issues that are relevant to you.
For example, if you’re at the earlier stage of your financial lifecycle – where you are seeking to accumulate wealth and may be prepared to take more risk – then teaming up with a Financial Planner who spends 95% of their time helping retirees manage a low-risk portfolio might not be the best fit for you.
4. Fees: How much will it cost – and what do I get for my money?
Be prepared to pay for the advice you receive, but do check how much it will cost you – for your initial consultation as well as for ongoing maintenance and future financial health checks.
In 2013, the Financial Planning industry transitioned to a fee-for-service model, which means that planners are no longer allowed to receive commission from any products they recommend as part of tailored advice. This is good news for their customers as it allows for greater transparency around how Advisers make their money; lifts the quality of the advice provided; and paves the way for advice which is more suited towards the needs of their customers.
5. Reputation: What would your current clients say about you?
If you have an adviser in mind, then do some more research on them prior to getting in touch. Check their website, and any testimonials online so that you know they have happy customers.
Word of mouth is a great way to find a Financial Planner, so ask friends, family and colleagues for their personal recommendations.
6. Relationship: Who will be looking after my interests, and how often will we talk?
To get the most out of the financial advice partnership, it’s important to build a relationship with your adviser over the longer term, so check that you’ll be dealing with the same person.
You don’t want to be in a situation where you find an Adviser who meets all your criteria, and then realise that they won’t actually be the one dealing with you going forward.
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