Demystifying financial advice

The proposed new “best interest duty” for financial advisers is long overdue.
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03.Finding the right adviser

Conflict-free advice can be hard to come by in a world where the vast majority of advisors have an incentive to favour certain products. Our checklist can help you weed out the bias.

Due diligence

  • Getting a reference from a trusted friend is generally the best way to find a trustworthy financial planner. Ask them specifically what their advisor has done for them and how they’ve come out ahead by hiring one.
  • Professional associations also offer useful services for finding an advisor. Three worth looking into are the FPA, CPA Australia, and the Association of Financial Advisers.  
  • Contact the firm for more information once you find some good prospects (if they tell you you’ll have pay a visit to find out, keep looking). The first question to ask is whether the advisor is employed by or authorised to represent a business that holds an Australian Financial Services (AFS) licence. To verify, visit ASIC’s website and check the AFS Licence Register, AFS Authorised Representatives Register, Banned and Disqualified Persons Register, and National Names Index (to find out about the company).
  • Is the advisor independent? For this to be the case, they must offer a fee-for-service rather than a commissions-based payment system. We recommend fee-for-service, unless all commissions are fully refunded to the consumer. Make sure this is made clear.
  • Does the licence cover the services you need? You may be looking for advice on superannuation, insurance, shares, managed funds or banking products – does the advisor specialise in one area? If yes, ask for evidence of past successful advice in that area using specific examples.
  • Who’s the parent company? Almost all advisory firms are linked to a bank, insurance company or fund manager and may only be allowed to offer products from those companies - or have a strong financial incentive to prefer them even if they’re free to offer other products. This doesn’t necessarily mean you’ll get bad advice, but you need to be aware of the conflict.



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