Tips for picking a good financial adviser to help with managing money and investments
With the Australian economy rebounding strongly, it’s a great time to review your financial health and targets. Follow these tips for picking the best adviser.
As Australia’s economy rebounds strongly from the coronavirus crisis, it’s a good time to review your financial health and targets.
More than two million Australians use a financial adviser annually, with help on a wide range of issues including cash flow and budgeting for family holidays, private education for your kids, mortgage, growing your nest egg for retirement, power of attorney and will.
But for those looking to get professional financial help, it can be quite a daunting experience, especially following the high profile case of Melissa Caddick, who took millions of dollars from several dozen people by posing as a bogus financial adviser.
TALK TO FAMILY & FRIENDS
Financial Planning Association chief executive Dante De Gori says “everyone could benefit from a professional financial planner”, but it really does depend on your personal circumstances, needs and knowledge.
De Gori recommends asking family and friends if they are aware or have used financial planning services, and then build a short-list of maybe three financial planners and firms and check their credentials.
Plus, check the Australian Securities and Investments Commission’s Moneysmart website to make sure that the person’s license is currently up to date and who they work for.
“And then the final piece of the puzzle, which is the bit that really depends on what you want is do a little bit of a Google search before you give them a call or interview,” he says.
Financial experts can charge by the hour, a flat rate or take a percentage of the assets that you’re looking to invest. A so-called ‘Statement of Advice’ costs $3,251, while the cost of ongoing advise is $4,299. Prices jumped sharply last year, due to increasing regulatory costs.
Author and financial commentator Effie Zahos says do lots of research before seeing a financial advisor, noting there is “enough free information out there from government websites and corporations for you to really get an understanding of at least the jargon”.
CHECK CREDENTIALS
Zahos recommends checking if the advisor is independent; what licences they have and their area of speciality. Also, what products they offer; have they got referrals that they can help with and how much do they charge?
“Doing that due diligence is absolutely important. A good financial advisor should be all about creating wealth but having said that it’s not cheap to see a financial advisor,” she says.
You can shop around for advice, in a sense, and get them to prove to you what they’re going to do for you.”
Zahos says she would always go for an independent financial adviser, which can more expensive as they charge by the hour. She would like to see fees for preparing a financial plan available as a tax deduction.
“If you’re going to a financial advisor, they need to prove that what you‘re paying them is actually going to give a return on your investment.”
A new MLC Wealth survey found that the majority of Australians that currently have a financial adviser feel in control of their finances, as opposed to half who have never had an expert to help with their finances.
Of those Australians currently using an adviser, 40 per cent believe they are saving more than they did a year ago, compared to 24 per cent of Australians who have never used an adviser.
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