Financial planners have lost trust, so how do you find a good one?

IT’S become harder to find a good financial planner as both advisers and their clients have retreated into shells this year, but it’s not impossible.

TRUST in financial planners has been trashed at the banking royal commission, and even happy clients are now unwilling to recommend their advisers to others.

This drop-off in word-of-mouth recommendations comes as demand for professional advice is tipped to climb as new tax, superannuation and investment rules increase Australians’ financial complexity.

The financial planning industry has been subdued amid royal commission reports of rip-offs, bad advice and fees being charged to dead people.

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New research by Investment Trends has found that three-quarters of advice clients are satisfied with their planners but just 30 per cent are highly likely to recommend them, down from 51 per cent last year.

Investment Trends senior analyst King Loong Choi said the royal commission “may have had an impact on people’s willingness to recommend their planner”.

However, about 2.1 million people plan to seek advice in the next two years, up from 1.6 million in 2017, Investment Trends found.

Kerry Little says the financial planning industry should do more to explain its benefits.

Advice group Enrizen’s executive director, Frank Da Luz, said constant Budget changes and superannuation tweaks made it difficult for people to say on top of the rules.

“The Royal Commission has painted the industry in a bad light, but it has also brought the issues to the fore, which is an opportunity,” he said.

“Clients are more wary and will be asking more questions … Financial planners will also need to be more transparent, which is beneficial for consumers.”

Kerry Little said she and husband Terrence had benefited from professional advice around cash flow and budgeting, super rollovers, investment properties and insurance.

“I believe there is a whole misconception about what financial advice is,” she said. “People think it’s only for the wealthy, and I still think the industry has a long way to go in educating people that aren’t advised what help is available to them.”

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RSM national head of financial services Rod Edwards said people choosing a financial adviser should consider factors including how advisers were paid, their fees, qualifications and whether their firm owned financial products.

“If the firm owns financial products such as insurance or loans, there is bound to be a conflict of interest for the adviser,” he said. “The incentive will be to sell those products to the client regardless of whether they’re the right fit.”

HLB Mann Judd Sydney head of wealth management Michael Hutton said people should be selective when choosing a planner.

“Get a feel for the way they communicate … Don’t be afraid to ask questions. Does the adviser make things seem complicated, or are they able to explain it in a manner you understand?” he said.

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HOW TO FIND A GOOD PLANNER

• Identify the advice you need.

• Seek word-of-mouth recommendations from friends and family.

• Try the Financial Planning Association’s free online find-a-planner service.

• Meet at least three advisers before choosing one.

• Write a list of questions you want to ask and how you hope to benefit.

• Check their fees and qualifications.