Financial Advisers, Planners and Counsellors – What’s the Difference?

One of the many complex and confusing issues faced by consumers of financial services is to understand the differences between the terms financial adviser, financial planner and financial counsellor.  

The objective of this article is to explain the differences, why they matter, and to outline the basics of the services you should expect from each of them.

Financial Adviser vs Financial Planner

The good news is that’s there is no difference between the terms financial adviser and financial planner. They are interchangeable.

Both terms refer to individuals who are licensed through a government-issued licence (called an Australian Financial Services Licence or AFSL) to offer personal financial advisory services to members of the public, including advice on financial products, for which they may charge a fee  based on an hourly rate, a flat amount or a percentage paid by you out of your investments. Or they may earn a commission or other incentive paid by a financial institution with which they have a commercial arrangement (often a life insurance company).

What Advisers/Planners must tell you

The precise nature and scope of those services, the manner in which the adviser is remunerated and the ownership/commercial associations of the adviser must be outlined clearly in a mandatory document called the Financial Services Guide (FSG). Your adviser/planner must give you a copy of this document and we recommend that you read it. 

Why remuneration matters

It’s especially important to understand how your adviser is remunerated. In saying this, we are not suggesting that all financial advisers/planners are likely to give you poor advice, however, we are saying that conflicts of interest (especially those caused by remuneration arrangements and ownership) may influence the independence of the advice and whether it is offered in your best interests. To understand this concept, we recommend that you take the time to watch our short film Financial Advisers – The Facts and the Fiction.

We also recommend that you should:

a) read the Centre’s website content on Getting Financial Advice; and

b) consider seeking advice from a purely “fee for service” adviser/planner listed in the ADF Financial Advice Referral Program.

A Warning

Personal financial advice can be expensive. Thousands of dollars per annum is common. Therefore, make sure you understand exactly what the adviser/planner is going to do for you and how much it’s going to cost in dollars annually (not just in percentages which can be misleading).

For example, not all advisers/planners will be interested in engaging with you on small, one-off matters, so it’s important to have that conversation up-front. There’s more on the types of advice offered by financial advisers/planners on the Centre’s website.

What are Financial Counsellors?   

Unlike financial advisers/planners, financial counsellors are specifically qualified and trained to help people who are experiencing financial difficulty.

Importantly, their services are free and confidential. They do not offer financial advice/planning services or financial product advice (as described above).

The professional expertise of financial counsellors lies in their knowledge and training about credit, bankruptcy and debt collection laws, government welfare and support arrangements and industry hardship practices. They are also trained in negotiation and counselling skills.

What Financial Counsellors do

In summary, financial counsellors may assist you in:

• Undertaking a review of your financial position to help you fully understand your circumstances;

• Guiding you through your options/strategies and helping you to plan your way out of debt;

• Offering advice on how to negotiate with your creditors and government agencies;

• Negotiating directly with your creditors;

• Providing advice about your rights and responsibilities; and

• Referring you to other specialist support services, such as legal aid, family support, personal counselling and emergency relief. 

Your Responsibility

It’s important to understand that the role of a financial counsellor is to assist you in developing options to alleviate your financial difficulty. It’s not to make personal financial decisions for you. It’s up to you to make decisions about how to manage your financial situation with the assistance of the advice and options you’ve been offered by the counsellor.

What Financial Counsellors do not do

Financial counsellors do not:

• Charge fees;
• Prepare tax returns;
• Offer legal advice; and
• Provide personal financial and product advice (that’s the role of financial advisers/planners described above).

How to Contact a Financial Counsellor

Financial Counselling Services may be accessed through:

National Debt Helpline – 1800 007 007

The free National Debt Helpline is open from 9.30am to 4.30pm, Monday to Friday.

When you call, you’ll be transferred to the service in your state. 

Mob Strong Debt Helpline – 1800 808 488

Mob Strong Debt Helpline is a free legal advice service about money matters for Aboriginal and Torres Strait Islander peoples from anywhere in Australia.

This is open from 9.30am to 4.30pm, Monday to Friday.

Small Business Debt Helpline – 1800 413 828

If your family business is struggling because of COVID-19 or natural disasters, call the Small Business Debt Helpline.

This is open 9.00am to 5.30pm, Monday to Friday.

Farmers or rural and regional businesses

Farmers and other rural businesses struggling due to drought or other hardship can talk to a rural financial counsellor. The government is funding financial counselling for small regional businesses affected by COVID-19.

Do Not Ignore or Defer the Problem

The important point here is that if you are feeling overwhelmed by financial pressure and debts, do not ignore or defer the problem. By contacting a financial counselling service as soon as possible, you will maximise your options and increase your chances of a successful outcome.

Like to Know More?

If you’re unsure about whether you need a financial adviser/planner or a financial counsellor; or you’d like to know more about how a financial counsellor may be able to assist in resolving your difficulties; or you need guidance in contacting a suitable financial counsellor, you are most welcome to contact the Centre.