SEEKING FINANCIAL ADVICE?

Your guide to sourcing a trustworthy financial adviser

The financial services industry has a history of well-documented poor behavior which led to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

It is easy to understand why many Australians (and in our context, ADF members) are hesitant to engage and regularly seek the Centre’s guidance on sourcing trustworthy financial advice.

In response to this need, Defence established the ADF Financial Advice Referral Program a decade ago. The Program consists of a list of over 30 licensed financial advisers across Australia who meet certain ethical and professional standards prescribed by the Centre. They are all required to sign a declaration that they will meet these standards at all times, for all of their clients, not just ADF members.

In summary, our standards require advisers to commit, in writing, that they will not use any form of commissions, percent-based asset fees and other forms of remuneration and incentives that are designed to create an incentive to sell products or accumulate funds under management. This includes commissions on life insurance, mortgage broking and real estate sales.

As a result, the advisers in the Program are expected to charge their clients on a genuine fee for service basis, by using flat fees or hourly rates (not percentages).

We’re not saying that the advisers in the Program will always suit your needs, will charge lower fees than current industry rates or will be technically excellent on every detail of the military superannuation schemes. You could expect an adviser who is a participant in the Program to have knowledge of military pay, conditions and superannuation, however, the knowledge base and experience of each adviser varies.

As a consumer, you’ll to need determine whether there’s a “good fit” between you and the financial adviser. To assist with this, most advisers in the Program will spend some time up-front with you for no charge, so you can get to know one another and determine if you can work together effectively.

Most importantly, what we are saying is that advisers who adhere to the ethical and professional principles in the Program are declaring they will offer you financial advice in your best interests and are declaring that they are not incentivised to do otherwise.

Putting it another way, identifying an adviser who suits your needs, charges acceptable fees and possesses appropriate technical skills is  important. But you should also feel confident in the ethical and professional standards of the adviser you choose to use. That’s why the Financial Advice Referral Program has been designed around that fundamental imperative.

If you’d like to know more about choosing a financial adviser, there’s a large amount of easy-to-read educational material on our website, including types of advice and questions to ask in meetings with advisers.

We strongly recommend watching our short film Financial Advisers – The Facts and the Fiction. It explains the impact of conflicts of interest on the industry’s behaviour and outlines why you should consider using an adviser who adopts the ethical and professional principles in our Program. Having done that, you might like to undertake our Financial Advice Knowledge Quiz.

Remember that while the advisers who are part of the ADF Financial Advice Referral Program have signed our declaration, no one is likely to care as much about your money as you do. So be sceptical, ask questions, seek second opinions, and take your time in making important financial decisions that will impact the rest of your and your family’s lives.

Helpful Links

• Hayne Royal Commission
• Governance Institute of Australia
• Financial Advisers – The Facts and the Fiction video
• Financial Advice Knowledge Quiz