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Choosing A Financial Adviser

Greg Medcraft
16th June, 2015

Editor’s Note: This article describes useful general principles regarding choosing a financial adviser. Members of the Defence community should make use of the ADF Financial Advice Referral Program at www.adfconsumer.gov.au in the first instance. The ADF program incorporates many of those principles but also excludes financial advisers who operate with remuneration-based conflicts of interest.

Choosing the right financial adviser is an important decision. You may like to spend some time researching and comparing a number of advisers as this will improve your chances of finding the right one for you.

Financial advisers register

Before you decide to work with any adviser, you should check ASIC’s financial advisers register. This new register contains a list of people who provide personal advice on investments, superannuation and life insurance.

The register tells you:

  • the adviser’s experience and employment history
  • what product areas the adviser can provide advice about
  • whether the adviser has been the subject of disciplinary action by ASIC
  • the name and number of the Australian Financial Services (AFS) licence holder who employs or authorises the financial adviser to provide advice, and
  • details about who owns or controls the licence holder.

If the adviser is not operating under a licence, do not deal with them. They are breaking the law and you will have little protection if things go wrong.

From mid-2015 the register will also contain information about an adviser’s qualifications, training and professional membership details.

Qualifications

A financial adviser can be qualified to give advice only after meeting minimum training requirements. To increase your chances of getting advice that is right for you, you should look for an adviser who also has a diploma, an advanced diploma or degree qualification in a relevant discipline such as finance, economics, accounting or financial planning. A degree is a higher level qualification than a diploma or an advanced diploma.

Experience

Ask the adviser about their typical clients. This will help you judge whether they have the experience to deal with people with similar issues and goals to you. For example, are the adviser’s other clients planning for retirement or are they young families wanting to save for their children’s education?

The amount of experience an adviser has is also relevant. For example, an adviser that has recently graduated may be highly qualified; however, they may not be as experienced as an older adviser with fewer qualifications.

Financial products

Check that the adviser can provide advice about the financial products you currently have. This is important as the adviser may not be able to give you advice about your current investment products if they’re not on the adviser’s ‘approved product list’.

Ongoing professional development

Like other professionals, it’s important for an adviser to keep up with industry or regulatory changes that might affect their clients. An adviser should participate in regular training activities such as courses or seminars run by universities, industry associations, professional bodies or registered training organisations.

Industry association membership

Also check to see if the adviser is a member of an industry association and/or a professional body. Most associations require members to participate in ongoing training, have a code of conduct for members to follow and a mechanism for handling complaints.

For more information about choosing a financial adviser, including a list of questions to ask an adviser before you engage them, visit ASIC’s MoneySmart.

Greg Medcraft
Chairman
Australian Securities and Investments Commission

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