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Navigating the financial advice process

Greg Medcraft
28th June, 2017

Facing major financial decisions can sometimes be challenging and complex. A range of factors, including past experience, individual expectations and personal biases might impact your decisions and the outcomes of those decisions.

A first step is to review your finances – calculate your income, track your expenses and identify your debts. Next you should establish your short and long term financial goals and ASIC’s MoneySmart website suggests steps to improve your finances.

Identifying your financial advice needs

Having access to the right kind of financial advice can help you make these decisions and put strategies in place to achieve your financial goals. However, currently only about one in five Australians obtain financial advice and three in ten people say dealing with money is stressful and overwhelming.

Professional financial advice is most valuable when you’re experiencing major life events such as getting married, being retrenched or managing an inheritance. It can also help with long-term financial goals, including growing your super and planning for retirement.

Choosing a financial adviser

When choosing an adviser, you should do your own research and ask questions about their financial qualifications and experience, advice fees, financial products and sales incentives. You can refer to ASIC’s Financial Advisers Register to check an adviser’s credentials, and ensure that they haven’t been banned or disqualified from providing financial services.

Financial advice costs

Depending on the complexity of the advice needed and the type of financial products recommended, fees and commissions may vary. Before you commit to paying for a financial plan you should agree on the goals and areas of advice that will (and will not) be covered and discuss the associated fees.

Evaluating and implementing financial advice

Your adviser will prepare a Statement of Advice documenting the strategy and any financial products recommended. They should discuss the risk and return of any recommended products and factors influencing the financial advice provided.

ASIC’s MoneySmart Financial Advice Toolkit

You can use ASIC’s MoneySmart financial advice toolkit at any stage of the financial advice process. It allows you to create a customised ‘to do’ list to suit your personal financial needs and offers impartial guidance on:

  • Identifying financial goals and advice needs;
  • Tips on choosing an adviser;
  • Preparing to meet a financial adviser;
  • Understanding your Statement of Advice and;
  • Reviewing your financial situation.

Greg Medcraft is Chairman of the Australian Securities and Investments Commission

The ADF Financial Advice Referral Program can help you find a financial adviser who provides genuine fee for service advice which is free from remuneration-based conflicts of interest.

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