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May 24, 2012
Shop around before choosing a financial adviser,
says Australian Securities and investments
Commission chairman Greg Medcraft.
AS ADF members you know
the importance of relying on
expert advice when making
decisions. When it comes
to investment decisions, you may
decide to use a financial adviser; and
if you do, it pays to do some research
to ensure you find one that's right for
you.ASIC's recent research (Report
279, Shadow shopping study of finan-
cial advice) underlines the importance
of shopping around before you engage
Look for someone with experience
and expertise. Don't just rely on rec-
ommendations from friends or family.
Professional associations such as the
Financial Planning Association and
CPA Australia can provide a list of
advisers in your area.
Once you have a list of firms or
advisers' names, phone them to find
out about their business. Explain that
you want to talk about their services
but not make a commitment at this
stage. Visit their websites to make
sure they have an Australian Financial
Services licence and get a copy of their
financial services guide.
ASIC's shadow shopping research
found that people can be swayed by an
adviser's confidence, approachability
and friendliness, and find it difficult
to assess the quality of the advice they
receive. So it's important to focus at the
outset on the services an adviser offers.
For more information on finding a finan-
cial adviser, see ASIC's consumer website:
Here are some questions you can ask an
adviser, and tips about what to listen for.
How long have you been giving finan-
cial advice? You may prefer someone
with more than five years' experience.
What type of clients do you mostly
see? Are the clients in a similar situa-
tion to you?
What investments do you advise on?
What about the investments I currently
have? If the adviser is restricted to cer-
tain types of products he or she might
not be able to advise on your current
investments. Make it clear whether you
want comprehensive advice or limited
advice about an existing investment.
Puts client's needs first
What information will you need from
me? An adviser should ask about your
income and expenses, what you own
and what you owe, your dependents and
your financial goals, both short and long
How do you deal with a client who has
a few different financial objectives? An
adviser should help you prioritise your
financial objectives, explain and discuss
choices with you and develop a realistic
strategy to achieve your objectives.
What qualifications do you have?
A diploma or degree qualification in
finance, economics, accounting or
financial planning is desirable. Also look
for professional designations such as
Certified Financial Planner.
How much will it cost and how are you
paid? A fee-for-service model charges
a set amount for a specific piece of
work. Some advisers are paid a mix of
fees and commissions. If they charge
ongoing fees, you should expect regu-
lar reviews. However they charge you,
make sure you understand completely
by asking lots of questions, especially
Email ASIC at ADFcolumn@asic.gov.au with
topics that interest you
Photo: Rebekah Day
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