Choosing a Financial Planner

Deciding on a Financial Planner

Working with a financial planner is a very personal relationship. In addition to competency, a financial planner should have integrity, trust and commitment to ethical behaviour and high professional standards. You want to find a planner who:

• will put your needs first
• will fit in with you personally
• has experience working with people in your situation
• specialises in the areas of planning you require (asset management, retirement planning, etc)

It is recommended by government and industry bodies that you interview at least three planners in person to find the right one to serve your needs. This may sound like a time consuming process but it is better to take extra time now than find yourself in a bad situation (personally or financially) later on.

Steps for selecting a financial planner:

Step 1 - Work out what you want.

Before you begin speaking with financial advisers it is important for your to take a close look at your financial situation and think over what you want advice about. The more your adviser understands about you, the better their advice should be.

• Personal details - assets (house, car, super) and liabilities (mortgage,  credit cards),  income and expenditures. Wills trust documents and insurance policies.
• Your goals - short-term and long-term goals. Make each goal specific, realistic and include timeframes.
• Your risk profile - think about investments you will be comfortable with and how much risk you are willing to take with your money.
• Your needs - what do you want your adviser to do? Give an overall plan? Advise you on a particular investment type? Help with super or insurance matters?
  

Step 2 - Gather some names

There are several ways to find a financial planner:

1. Why not try the FREE Quotify Finance online referral service? Your financial planning needs will be matched with pre-qualified providers who will call you directly to discuss your needs.
2. Ask family or friends for a recommendation. Remember to be objective though and interview all prospects thoroughly. Just because a financial planner is right for your neighbour doesn't mean they will be good for your particular situation.

Only talk with advisers who are employed by or are authorised to represent a licensed advisory business. Check licence details or see if someone is banned by calling the Australian Securities and Investments Commission (ASIC) on 1300 300 630 or online at its consumer website FIDO.

Ask each financial planner to send you a copy of their Financial Services Guide. Compare the FSG for each planner. Look for details of the services they offer, fee structure, names of license holders and whether their products come from a range of institutions or just one.

Eliminate anyone who:

• does not have a license
• who does not send you a FSG
• whose FSG does not tell you how they handle customer complaints
• doesn't have professional indemnity insurance
• tries to sell you products over the phone
  

Step 3 - Interview short-listed providers

Now you are ready interview planners. Remember, this interview process is not about getting financial planning advice it is about selecting an adviser.  Important to this interview is how they respond to you and your questions.

Here are some of the key questions to ask:

• What are your qualifications?
• How long have you been giving financial advice? If less than 2 years, ask if someone will review the advice given to you.
• What kind of clients do you mostly see?
• What are they mostly trying to achieve?
• Are there any products you don't advise on?
• Do you specialise in any product areas?
• How much is the advice likely to cost?
• How do you keep up-to-date on rules and regulations?
• How do you go about understanding a new client?
  

• tries to sell you a product at the first meeting
• doesn't listen to you or have an understanding of your goals
• promises great returns or offers you a get rich quick scheme
• you don't feel comfortable with
  

Step 4 - Select a Financial Planner

Once you have chosen an adviser, you will make an appointment to get advice. You might decide to select more than one financial planner to prepare financial plan also known as a statement of advice (SOA). If this is the case, make sure you are aware of any costs for this advice. Some planners will charge a one-off preparation fee.

You will want to bring to this meeting all of the information you gathered in step one: your personal details, goals and needs. In order to give you good financial advice your financial planner should be working from accurate and up-to-date information. They should understand what you want advice about and what you are aiming for.

Step 5 - Assessing your written plan

The next step in the process is reviewing your financial plan or Statement of Advice (SOA) and deciding whether to act on the recommendations. It is important to take your time with this process and read all documentation very carefully before agreeing to anything.

The statement of advice should:

• be marked as a statement of advice (SOA)
• give a correct summary of your financial and personal situation
• list the financial strategies and products recommended by your adviser
• detail why the strategies and products are recommended
• what you will pay (now and in the future) for all advice and products
• how to act on the advice

Important:

• carefully evaluate the risk as well as the returns of all recommended financial products
• ask lots of questions. Make sure you fully understand the advice and recommendations before agreeing to anything.
• review your goals and make sure the general recommendations suit you and your family's goals.
• always read the fine print. Make sure you have received a product disclosure statement or prospectus for each financial product.
• good advice may not involve a product recommendation. It could be a list of actions that move you toward financial objectives.
• review your plan periodically.
• understand rules and regulations for 'cooling off' periods
  
• Never write out a cheque for an investment to your financial adviser.