Guide on How to Choose the Right Financial Planner

Do you know how to get good financial advice?

Let's face it, we are all busy living our day to day lives. Whether it's spending time with our family or friends, working , building businesses, playing , dining or travelling. There is always something that we choose to spend our time on and more importantly many of these choices come at a cost and require money (financial resources).  Without financial cash flow or capital you can't have a lifestyle, simple as that. 

Therefore it seems like common sense that we all have some kind of financial plan in place to ensure that we don't spend more than we earn, that we invest correctly, cover our risks, protect our assets, provide for our familes and plan for our future. (That's a mouthful and it's true, we all have important priorities in life that involve the use of money)

At some point in your life you will most likely need to make decisions about share investing, property investing, loan structuring, retriement, taxes, financial management and economics. How do you do all this with the little time you have left in each day?

Its simple, you need to hire someone to help you. A financial planner (or financial adviser) can assist you, guide you and implement financial strategies that will support your current and future  lifestyle goals. They can see the big picture and not just one area of your situation.  A good financial adviser has an understanding of all financial related matters and also knows how to get you towards your goals. While your accountant can provide a sound tax strategy if they are not licenced in financial services they are unable to advise you in other matters such as life insurance, home loans, superannuation, self managed super and investing.

Whether you live in Sydney, Melbourne, Brisbane or any state of Australia there are a lot of financial planners to choose from and many operate on either a fee for service model, hourly rate or charge a fee through products or services they recommend. A full disclosure of how they charge and get paid must be provided to you when you take up their advice (Note: under the latest Future Of Financial Advice (FOFA) reforms there is a whole list of rules financial planners and advisers must adhere to that keeps them compliant and protects you as a client). Regardless of what we see in the media and sometimes bad press there are a large number of expert, trustworthy and ethical financial planners available to help you. You just need to find the right one.

So how do you choose the right financial planner?

There are number of things to look for when choosing to get financial advice from a financial planner, here is a good list to start with:

Licencing  - A Financial Services Guide (also known as an FSG) should be given to you when you meet and provides details about the planner's background, licencing, remuneration and what they can provide advice on.They need to be an Authorised Representative (AR) and typically come under an Australian Financial Services Licence (AFSL). This gives some insight to who they are and how long they have been an adviser. Of course experience level can impact what level of advice your want and also how much you are willing to pay.  Fee's can range from $550 for simple advice to $5,500 and above for full comprehensive advice. Remember to consider the value of the offering before making a decision. If it means that you could add another million dollars to your asset base over the longer term the fee could be well worth it. You have to believe in the value of financial advice before proceeding otherwise you may find it difficult to make a final decision.

Business Ownership: Run a reference check on the business owner and see if the products and services they offer are influenced by their stake in the business. For example over 70% of financial planners typically work under a major bank or financial institution and in some instances they are only allowed to provide certain products owned by the bank. Look for an adviser that can provide an objective view and recommendations that are not influenced by which products they can offer. Strategic financial advice should be the main focus, not products.

Suitability: Have you looked at what they offer versus what you need. Are you lookin for a specific solution or a one stop shop. Many advisory firms are limited on what products and services they can offer.  A comprehensive financial strategy will most likely require a financial planner that has a lot more to offer than just a simple plan.

Organise a meeting: This the best way to understand if the adviser is the right fit for your needs. By meeting and speaking with your adviser for the first time you will get a sense of their knowledge base, experience, personality, fees and ethics. A  decision should be made to choose the planner that you feel will help you achieve what you want financially and not just compare different types of advice as this defeats the purpose of hiring a trusted adviser.

Family Office - Are you a high net worth individual or family? If you have a considerable level of income and assets then you should ask about Family Office. This service is highly specialised and the planner is able to provide a full service to help you with business structuring, family asset planning, investment portfolio strategies, family tax management and self managed super funds. The higher your level of wealth the more pro-active you likely need to be to manage your financial position such as managing share portfolio's, property investments, superannuation funds, taxes, estate planning and intergenerational wealth. 

There are a few other questions you should ask your financial adviser to assist you in making a more informed choice:

  • How long have you been providing financial advice for?
  • What qualifications do you have?
  • Which firm are you licenced with and who is the owner?
  • What kind of advice do you provide? What area's do you specialise in?
  • How do you help your clients in terms of understanding whats important to them about life and money?
  • What kind of clients do you work with?
  • Are there any products or services that you are not allowed to advise on?
  • How do you charge for financial planning and what fees can I expect to pay?
  • How do you select the investments you recommend, what research do you use?
  • What is your method of staying of top of industry and market news, including changes to legislation?
  • What ongoing services do you provide?

(For more on the FOFA reforms read the full report).

If you would like to learn more about getting good advice from a panel of qualified financial adviser's contact us.

Looking for a financial planner in Sydney? Click here.

 

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