Finding a financial planner and what to look out for - Getting the most from a financial planner series: #2 January 18th, 2023
One of the problems with engaging a financial planner is not knowing what to expect.
Worse still, once you’ve signed up and are perhaps paying thousands of dollars in fees each year, are you actually getting value for money? Sadly, there’s no industry association, government body or other groups that set the standards. In that regard, financial advice and planning is pretty much a free-for-all.
Some advisers operate fantastic “hold-your-hand” financial advice services while others charge outrageous fees for doing little more than selling you a financial product or service like operating a self-managed-super-fund. Bear in mind that you’re probably also paying for the operation of these funds in addition to the advice.
This series of articles is intended to be a warts’n-all breakdown of what good financial advice looks like.
It comes from 35 years in practice, a former “financial planner of the year” and a University Lecturer at both undergraduate and postgraduate levels.
Education
It’s a bizarre state of affairs but up until 3 years ago, a person could knock off an online financial planning course over a weekend and then on the following Monday advise you on what to do with your life’s savings.
Thankfully now, all new entrants must have a university qualification and engage in a supervised year before they’re let loose on you.
The problem is the other 16,000 advisers out there. There are still plenty of people dishing out financial advice who have little or no formal tertiary education. It’s easy to be an education snob about these things but the fact is, providing proper comprehensive financial advice requires you to have working solid knowledge in:
- Accounting standards
- Taxation
- Budgeting and Cashflow
- Corporations Law
- Tax Law
- Estate Law
- Consumer Law
- Family Law
- Social Security Law
- Centrelink Policy instruments
- Micro Economics
- Macro Economics
- Financial Market Operations
- Portfolio theory
- Statistics
- Trade Practices
Basic requirements we recommend when searching for an advisor
Hopefully, you might have the name of a potential adviser from a close friend or colleague. That existing relationship with a financial adviser should have been running for at least 5 years to be a good indication of what type of service had been promised and delivered.
It also means there’s a good chance that the relationship has survived one of the many rocky financial periods we’ve experienced. A good adviser is there with you in both the good and the bad times.
So, what are you looking for if you don’t have someone excellent a close friend or colleague has referred you to?
We’ll start with education.
- A University Degree in Business, Commerce, Finance or Economics and;
- A qualification in overall Financial Services or Financial Planning, perhaps a diploma, masters or graduate certificate.
- (Be wary of people that may have a unit here or there or a list of specialisations without the base qualifications as well.)
It may be that you like the look or sound of someone or perhaps, you’ve decided to check-out the person that a close friend or colleague has referred you to.
It’s time to start digging around!
How to find out who’s who?
You start by visiting the excellent moneysmart.gov.au website and going straight to the financial advisers register here.
Type in the name of your potential adviser (or maybe, your existing adviser).
You’ll be presented with a page that tells you all about your prospective adviser.
First, look to see who the AFSL is, if you click that link you can find out a bit more about the parent firm. Who actually controls the AFSL, where they are based and how many other advisers they have working for them.
Next on the page, you’ll see who the adviser has worked with over the past few years.
This can be telling too…If they’ve been flitting here and there every couple of years, that could be a sign they either move on, or are “moved on”.
It does however beg the question. What happens to the clients they were supposed to be looking after at each of the firms they left?
The bottom of the page will provide details of their education. This is where you can tell what sort of training they’ve had.
One important and final point, there are some genuinely excellent advisers out there who don’t have formal qualifications. Often, their background might have been in the public service with many years of experience tucked under their belts. They may have excellent working knowledge in areas such as tax, aged care, health or Centrelink. You’ll probably have their name because a friend or colleague recommended them based on their own experience.
If on the other hand you are starting from scratch with no recommendations, look for the education and other pointers listed above.
Once you have a name as a possibility and you’ve visited Moneysmart, see if you can download their Financial Services guide or FSG. It might be as easy as Googling their name and the letters “FSG”.
The FSG is the mandated ASIC booklet that must explain who the adviser is, who they work for, how they are paid. It also explains what to do if things go pear-shaped.
The front page will be all telling. Up front they MUST tell if they are NOT independent. Forget the spin, if they ain’t independent and it says so on the FSG, they ain’t independent.
It is as simple as that.
What next?
In the next part of this series, we’ll explain what you can expect from your first meeting with an advisor, what it should cost and what defines a good ongoing service. Finally, how much is fair and reasonable to pay for that?
We’ll also be diving into who “really” needs the help of a financial planner, or can you DIY successfully?
Why are we telling you this stuff?
Netplan isn’t trying to be a traditional financial advisor, we want to give you the tools you need to succeed financially. Financial advisors have their place in the industry, but whoever you are, whatever your situation and no matter how much money you have, Netplan will help you to get the most out of the decisions you make with the financial resources you have available.