When it comes to getting financial advice, you’ve got the great font of all knowledge, real or fake aka ‘the internet’ or you could follow the financial sections of various publications and newspapers.
Alternatively you can read books on the subject from the likes of the Barefoot Investor, or you can go see a person who does it for a living; a licensed professional financial adviser.
The internet, papers and the Barefoot Investor can all provide general advice and can do it reasonably well. They can't (literally or by law) however provide personal advice specific to your particular circumstances. For that you'll need to seek out and engage a licensed financial adviser.
General advice and personal advice don't have to be mutually exclusive. As a matter of fact, you may want to educate yourself generally, and then go see a licensed adviser to get advice particular to your circumstances. This is really no different to having a health issue, researching it generally and then going to see a medical practitioner for more specific advice and prescribed medicine or medical procedures, depending on the severity.
Once you've worked out the advice part, the next step is putting it into ACTION! The important question is are you going to DIY or delegate the responsibility to a third party who are set up to do this in an efficient and effective way?
If you are a DIY'er that's great! Get your advice and make sure you implement it and regularly review where you are at with things. Be sure to keep track of changes in the 'rules' and any innovations in the market which may be of benefit to you.
If, like most people these days, you're happy to DELEGATE something which is not in your field of expertise (or perhaps interest?) it would be taken care of by someone else (an expert) who can do the work and research required for you. This acts to shift the weight of the responsibility that comes with managing your finances to the likes of a professional financial adviser who is well versed in these situations.
This guide assumes you want personal advice and/or are a delegator so you are in need of finding a financial adviser. General advice DIY'ers you are excused from the following discussion.
Before you read on you may be wondering, how could a financial advice group put together a guide on how to choose an adviser? Aren't we conflicted or biased? Well to make sure we're not we'll be referring to factors the Australian government via ASIC have prepared for your consideration when deciding to source quality and proper financial advice. This information comes from the Money Smart website and is easily accessible to refer in more detail at your convenience.
When it comes to choosing a financial adviser, you could choose to work with the top listing in Google, the guy with the most 5 star reviews or even the lady who your cousin referred you to.
According to the Australian government's website. Money Smart, you should choose your financial adviser based on the following Quality and Advice Factors.
We've prepared a step by step guide on how to search for an adviser below.
Simply type in the name of the adviser and then hit search. Then select the name of the adviser.
You will then be provided with the complete history of the adviser. If they have ever been banned or disqualified since 2015 they will show up on this page. As you can see, this particular adviser, Daniel Hewitt does not have any bans or disqualifications. It goes without saying that anyone with a ban or disqualification should not be considered for financial advice.
Advisers who were banned or disqualified, or who entered into an enforceable undertaking, prior to 31 March 2015 and who have not re-entered the advice industry are not on the Financial Advisers Register. They are on ASIC's Banned or Disqualified Register or Enforceable Undertakings Register website.
In the financial advice sector there are a number of professional organisations that Advisers must be a part of to be licensed to provide advice. These bodies work to maintain the integrity and professional development of all current advisers by ensuring they stay current on trends, products and any area of advice that will affect client outcomes.
There are 2 main bodies in Australia, the AFA (Association of Financial Advisers) and the FPA (Financial Planning Association).
If an adviser isn't employed or at least self employed, then you may just be dealing with a fake.
To find out these important details, all you need to do is take a quick search via the Money Smart website.
Being employed, qualified and having a good history means that the adviser which you deal with should not have any disciplinary actions or warnings against their name.
To look up an adviser you can go to this website.
An Australian Financial Services Licence (AFSL) is a license that an Australian business involved in the provision of Financial services is required to hold. An AFSL is required for a business that includes: providing Financial product advice to clients. There are a number of these licensees in Australia, some are aligned with banks and others are non-bank aligned. The adviser then operates under the licensees advice scope which means that the adviser can only recommend what the licensee is licensed to provide advice on.
Information about the license holder should be disclosed in the Financial services guide. The reason for this is that, in some instances, the licensee will be owned by a bank or large Financial organization and trade under another name, so it may not be clear on where the control lies. When it is disclosed it is easily identifiable who controls the license.
A Financial services guide (FSG) informs you of your rights, entitlements and details the services that the Financial adviser provides. It is simply part of the regulatory process to help ensure that clients are fully aware of their undertakings with Financial advice providers.
At the start of the relationship between a Financial adviser and a client, there is an obligation to fully inform you of your rights, entitlements and detail the services they provide. A Financial Services Guide (FSG) is provided by the licensee and provides an outline about who your adviser is and the types of services they are licensed to provide.
The FSG also provides information regarding all of the advisers that make up the team. This means you can familiarise yourself with the other advisers at the Firm.
To be a true advice provider the Financial adviser should have access to recommend a range of products and services, not just one or two. When an adviser can offer you a range of products and services it allows them to help identify the right fit for you. At the end of the day, an adviser should be Fitting their services around your lifestyle and goals, not their own.
As part of upholding their certifications, advisers are required to engage in professional development. They are also encouraged to attend industry events to stay in touch with industry updates. To give you an idea of the professional development required, the AFA requires its advisers to engage in 30 hours of professional development outside of work every year. Some firms will go over and above and request their advisers to do more than 30 hours. Of course this is all for the benefit of clients. When advisers stay abreast of change and legislation they are adding to their skills that help clients achieve their goals.
Outside of the quality factors that were mentioned above, you really need to get to know the adviser and the practice before you can determine much more.
To test and measure the advice factors, it is really based on your personal opinion. Everyone is different and everyone will get along with people differently. We operate on the values that you should do business with people you know, like and trust.
If you feel comfortable talking with the adviser on the phone or in person then you are generally in good company. If at any stage the adviser makes you feel uncomfortable then it is probably a good idea to walk away.
Before you walk away at the first sign of an uncomfortable conversation you may want to consider that coming face to face with your finances can sometimes be… uncomfortable. So, before you go into an appointment, take a moment to consider, what's truly making you feel discomfort? Is it natural to feel this away about your situation or is it simply that you don't like and trust the person sitting in front of you?
You can test Financial Framework's quality advice factors by simply calling and asking to speak with an adviser on (08) 6144 4000.
If you would like more information on these quality and advice factors, please email firstname.lastname@example.orgOUR CODE OF ETHICS & PROFESSIONAL CONDUCT
Financial Framework understands and embraces the Association of Financial Advisers (AFA) Code of Ethics & Professional Conduct. This code ensures that there are strict, enforceable guidelines for all AFA members to follow and forms the cornerstone of our honesty & integrity to you, our client. The code has 6 key areas as follows:
Act with the utmost integrity which encompasses the highest standards of professional conduct, honesty, and ethics.
Do not allow conflicts of interest to influence your actions inappropriately. Always place the client's interest before your own interests.
Educate your clients in Financial matters and help them to understand the decisions that they are making.
Provide professional service that is aligned to your clients' circumstances and your agreements with them.
Strive to achieve high standards of professional expertise by maintaining and improving our knowledge and skills, and those of our staff. The Financial Framework adviser team is required to undertake a minimum of 45 hours of Continuing Professional Development each year. The minimum for most other firms is 30 hours. Yes, we certainly take our education seriously.
If you would like to learn more about the AFA code of conduct that we follow, please feel free to visit their website.
The average fee for upfront advice can vary anywhere from $2,000 for simpler situations to $5,000 for more complex situations.
Ongoing financial advice will generally be cheaper in the following years with ongoing advice coming in at $3,450 for the average person. Of course, if your upfront advice is only $2,000 then your ongoing fees will be less than $3,450 in most cases.
*Investment Trends 2016 Planner Business Model Report
Ongoing financial advice is beneficial for those who have changing circumstances. A change in circumstances could include anything from losing weight, your kids moving out of home, selling a car and not replacing it, an illness in the family all the way up to the highly sought after lottery win - even if it is just a couple of thousand dollars.
It may not seem like it at the time, but these events can translate into a significant change in your long term financial affairs.
That depends... Life is an uncertain event. If you take up financial advice for 5 years without anything unusual occurring in your life (no medical emergencies, no large purchases, no downturns in your finances) and then you win $5 million dollars in the lottery, you may feel short changed for the advice you were paying for the previous 5 years. On second thought, maybe not - the lottery might help cure those emotions.
If we reflect on the lives of our friends and families and even our own lives, what are the chances of this situation occurring? Life is a giant game of risk full of uncertain events.
A financial adviser's role is to help you mitigate your risk and give you the best chance of beating the game. This service comes in many forms, but the most important thing to ask yourself is, am I getting value for my advice? And do I have a team that stands behind me when life does have a down turn? If the answer is yes then the advice is worth it. If you can't answer that question, then perhaps you should have a conversation with your adviser.