How to Choose a Financial Planner
by Renee Hush CFP®
The value of financial advice can be priceless, but taking that first step in selecting a financial planner and going to see them can be daunting. You are selecting someone to help you achieve your goals, manage your money, give you advice and most importantly to trust. So it is a big decision.
We all know the stories about funds that have gone bankrupt and the planners and advisers who have done the wrong thing by clients.
While there are bad apples out there, most of us are here looking to help you – it is why we are financial planners in the first place. Of course I want to have a successful business but I am in this profession to add value to the lives of my clients. I have signed up the the FPA’s Code of Professional Practice and I pride myself in putting my client’s interests first.
So how do you select a financial planner?
Besides the obvious things like making sure they are accredited to provide advice (see how below) and have sufficient training and knowledge, I think the most important factor is to make sure you are compatible for the relationship you are seeking.
Most planners will offer you an obligation and cost free initial consultation which allows you to get to know them and their business and vice versa. Take the time to make sure you are comfortable with the person and how they do business.
If you don’t like them in the first 20 minutes – it probably is not going to work.
You must trust them and be comfortable with the advice they are giving you and the way in which they explain it. You also need to be willing to engage in the advice process and take their advice.
If it is a one off transaction, you may not care who you deal with, but if you are looking for someone to manage your money and guide you through a number of years, you should ensure you are compatible in terms of personality and style of doing business.
You may be more comfortable with someone licensed though a reputable organisation or you may prefer total independence.
Whatever you decide you should understand that no matter who the adviser works for or is licensed through, our legal and fiduciary responsibility is to YOU the client. We are legally bound to provide advice in your best interests, not that of our businesses or ourselves.
The new Future of Financial Advice (FOFA) legislation clearly states this, however in my opinion the good advisers have been doing this all along.
Also check to see if the planner is a member of an association such as the Financial Planning Association (FPA) and that they follow a code of conduct.
Most good planners will explain the financial planning process, the fees and charges (both upfront and ongoing) and a little about themselves and their business in the first meeting, but if they miss something don’t be afraid to ask questions.
Often they won’t be able to tell you the exact cost of the advice until you have agreed to the scope of it, but they will be able to provide a range. Look for advisers who charge flat fees, based on the work they do rather than a percentage based fee.
Make sure you understand what fees you are paying and the advice and services you will receive in exchange for this. If you don’t understand, ask!
My other big tip is that if it sounds too good to be true, it probably is. Past performance is not an indication of future performance and any adviser guaranteeing you they can get you a certain percentage return (excluding fixed term deposits) is probably not telling the truth -especially if it is market based investments.
If you are happy to take the risk, go ahead, but I would suggest you know exactly where your funds are invested and not only has the planner told you about the opportunities but also any risks.
Lastly, do not sign anything you don’t understand or are not entirely comfortable with and do not go into any strategy or product you are not 100% comfortable with.
A good financial planner can help you achieve your goals both now and in the future. They will take the time to explain things and ensure you understand the advice they are giving you. They should be honest and transparent and willing to answer any questions you have.
Look for a planner who is a member of the Financial Planning Association (FPA). The FPA represents the interests of the public and Australia’s professional community of financial planners. Members of the FPA must meet stricter criteria and higher standards than required by law.
Tools to help you find a financial planner
To check that a planner is registered go to ASIC and select the Australian Financial Services Authorised Representative option in the drop down box.
The FPA is a good place to start looking for a financial planner. All FPA members are listed in an online directory called ‘Find a Planner’ that you can search by using your postcode. To go direct to ‘Find a Planner’ go to www.fpa.com.au/findaplanner
Renee Hush, CFP®
MLC Advice Parramatta