How To Choose An Adviser

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“Is it best to go through a bank or accounting firm or another organisation?”

“How can we assess if they are independent and the right person for us?”

“What questions should we ask them?”

“How do we monitor our finances to ensure that the advice we’ve been given is actually working?”

What was meant to be a quick coffee with the girls on a warm Saturday morning after walking our dogs, quickly turned into a storm-in-a-tea-cup as all eyes turned to me. As I considered how best to respond to these questions coming thick-and-fast from the most wonderful women sitting around me who I had known for the better part of over two decades, it struck me. No matter what their decisions in life-to-date, whether that was becoming a medical specialist, a business owner, a mum of two, a foreign aid policy worker, a physiotherapist or a financial services lawyer, all of them sheepishly confirmed how embarrassed they were about not knowing where to begin on the journey of planning their financial future and whether to work with a professional or go it alone for the time being.

Have you felt this way before too?

Having worked in the financial services industry for over more than fifteen as a financial planner and investment adviser, these questions really tug at my heartstrings because what it raises immediately is how confusing it can be to navigate the exploration phase of choosing an adviser if you decide you would like to work with one. This is true even for me at times as I try to decipher all the different titles advisers give themselves! 

I have been called a stockbroker, a private wealth adviser, a financial planner, a financial strategy adviser, a family wealth adviser, an investment adviser, a financial adviser, and what’s funny is that all of these were correct! 

But that is only because I was qualified and licensed to provide advice in all those areas. This is not necessarily true for all financial experts.

So, let’s go through my friend’s questions together. My hope is that this will help you move through an important early decision-making stage a great deal faster and feel confident doing so. 

Question 1: “Who should we be seeing? Financial adviser? Accountant? Wealth manager? What is the difference?”

Okay, so this is a series of questions, however the main point is the “who” question. Who should you be seeing? Assuming you are looking for someone to be with you throughout your important financial planning phases and decisions rather than complete your tax return, you are looking for a qualified financial adviser who can help you with both financial planning strategies and investments. 

What does this mean?

Whether this qualified financial adviser is called any of the above titles I have previously been called, it means they are a one-stop-shop professional who can help you with everything from tax planning, cash flow, superannuation, investment expertise, insurance, aged care, you name it.

How do I know what to look for?

Ask them upfront about their education and qualifications. Alternatively, look on their LinkedIn profile or company website. This is how you will know quickly whether to proceed with any further discussions or to walk away. Fast. 

Confirm if they have a Bachelor degree and potentially a Master degree, in the field of finance and especially in the field of financial planning and investments. In my view, confirming if they have completed the Certified Financial Planner® or CFP® certification is also important.

Being “RG146 compliant” is the bare minimum requirement in Australia and means that an adviser has completed educational training that satisfied the Australian Securities and Investments Commission’s (ASIC’s) Regulatory Guide 146 for anyone providing financial advice. 

Additionally, confirm whether they have completed their FASEA Code of Ethics and the FASEA national adviser exam. FASEA stands for "The Financial Adviser Standards and Ethics Authority" and is a new standard of educational level all advisers in Australia must meet. This legislative change came into effect 1 January 2019.

If you have ticked off your checklist that the adviser you are talking to has a Bachelor degree, CFP®, has completed the FASEA course and exam and additional education on top of this related to finance, investments, superannuation, mortgages and any other area that sits within the umbrella of financial planning, then you are on track.

Question 2: “Is it best to go through a bank or accounting firm or another organisation?”

We will start with the accounting firm part of this question as there are some distinct rules that apply. As of 1 July 2016, ASIC requires all accountants providing financial advice to hold either a full or limited Australian financial services licence (AFSL) and be an authorised representative of that AFSL. 

As such, if you already have a good working relationship with an accountant or accounting firm and would like to work with them for financial advice, investment advice or any other area beyond the accounting work they currently help you with, ask them if they have an AFSL and if your particular accountant is an authorised representative, or whether someone else within the business is. If not, you will need to look elsewhere for financial advice.

Whether it is better to go through a bank or another organisation altogether, is a matter of personal choice. If you decide to visit your local bank branch, remain mindful of the very strong possibility that an adviser working for a bank may be highly incentivised to recommend investments or financial advice solutions that are offered by the bank (and only that particular bank). 

The Royal Banking Commission which took place largely in 2018 happened for a reason. Several really bad reasons in fact! There are many great advisers that work for banks, however buyer beware. Go in with your eyes wide open for conflicts of interest.

Finally, there is the “another organisation” option such as a financial planning practice. There is a better chance that this option has far more separation from conflicts of interest and is independent, however still do your homework. Ask the adviser upfront whether there are any relationships with financial product providers, banks or insurance providers that exist, or whether there are any “in-house” products. This means products that have been created by the financial planning practice, such as an investment product.

All of the above three options can be perfectly good choices, as long as you are asking questions to bring to light any potential for conflict. Not all conflict means the adviser will be a poor quality choice, as some financial planning practices or accounting groups who create their own investment products have extremely strong alignment of interests and are looking out for your best interests by creating these products in the first place. However, you still need to ask all the right questions to begin with!

Question 3: “How can we assess if they are independent and the right person for us?”

Provided you have covered the above two questions to your satisfaction, ask to speak to one of the adviser’s existing clients. Alternatively, see if there are any testimonials or online reviews of this adviser. If the adviser has been recommended to you by someone else you know, ask them what it is about this adviser they like so much. 

Finally, trust your intuition. You are ultimately going to be the best judge of who you trust to help you with your finances. Personally, I like to see an adviser who is really invested in helping develop your level of knowledge through multiple forms of education and learning. This includes workshops, seminars, the amount of time they spend with you in person, over the phone and in email. Do they send you valuable content that you enjoy reading or watching?

Question 4: “What questions should we ask them?”

Every question you can think of!

But seriously, even if there are awkward questions to ask, ask them. A truly great adviser will respond with professionalism and care and welcome these questions.

For me, what I like to ask and equally what I enjoyed being asked, is how I engaged with clients during difficult financial times like the global financial crisis in 2008. These are the times when you would want to see an even greater level of contact and communication.

Ask them how they are remunerated, who will look after you if they are on holiday’s or even decide to change roles, why they became an adviser, you name it. 

Whatever questions you do ask, come in with a list to any meeting you have with them. Better yet, send the questions in advance!

Question 5: “How do we monitor our finances to ensure that the advice we’ve been given is actually working?”

Whilst it depends on the reason you engaged an adviser in the first place, as monitoring the performance of a portfolio is different to getting the right insurance policies in place, ask your adviser upfront how the advice will be measured to ensure the plan is on track. This is a question they should be able to answer for you. 

Can your adviser create projections or model out scenarios for you? Are there benchmarks you can compare yourself to? Online reporting? How often can reports be generated? How much tax will be saved over the years if you do X versus Y? Lastly, ask your adviser how often they will contact you as well as how often you can contact them, depending on the service agreed to, so you know what to expect. Keep them accountable as well as yourself!

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Needless to say, these are not the only five questions I have enjoyed discussing with my friends and there was a certain amount of relief expressed at our coffee catch-up knowing that all of them had similar questions about their finances and did not feel alone in this space. Please know that if you have these questions too, you are not alone either!

Another brilliant question that came up was “What is a financial plan? What is the right time to think about it – when you have $1,000 or $10,000 or $100,000?”. 

So stay tuned, as we will explore this question in a future article.