CHOICE applauds new financial planning rules

CHOICE has campaigned for reform for over two decades.
 
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04.Checklist and contacts

By addressing the fundamental conflicts of interest in the industry, the government reforms should give consumers a lot more confidence in the system. But at the end of the day, you still need to educate yourself about the advice provided, and the strategies and products recommended, and be satisfied they’re right for you. Use the following checklist to minimise the risk of poor or biased financial advice.

 

 

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Assessing your adviser

  • Licence: Check your adviser’s authorisation to provide financial product advice with ASIC.
  • Read the financial services guide to find key details such as ownership and independence. Licensed advisers must provide an FSG before you start dealing with them. 
  • Ask about your adviser’s qualifications, training and experience. According to the FPA, “the minimum standards required under RG146 [the legislation] are inadequate for the delivery of quality advice and therefore create a risk of consumers acting on information provided by providers that are not appropriately or professionally qualified, may not have the skills required to explain complex concepts, and may pass on inappropriate advice without consideration of the principles of financial planning.” The FPA's Certified Financial Planner designation is a higher qualification.
  • Professional association: Are they a member of a reputable professional financial planning association? Codes of practice, accountability standards for members and internal complaints systems for dealing with complaints may give you extra assurance. However, association membership is not a guarantee of good advice.
  • Find out which types of financial products, and which providers, the advice covers. Many advisers owned by large banks, for example, do not recommend industry super funds and other investments that don't pay commissions. 
  • Check what research is used by the adviser to create their lists of recommended investments.
  • Study the product disclosure statement(s) (PDS) for any recommended products.
  • Get a written Statement of Advice and clarify any parts you don’t understand.
  • Get a second opinion if you’re in any doubt about the advice you receive.  
  • Coming soon: check complaints about advisers and companies with the Financial Ombudsman Service.
  • Due diligence: Educate yourself about the advice provided and the strategies and products recommended, and ensure you’re fully satisfied that they’re right for you.

Contacts

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