How to choose a financial planner. Helpful tips on choosing a financial planner

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1 How to choose a financial planner Helpful tips on choosing a financial planner

2 Some tips to help you choose Often, choosing a financial planner can be the hardest step in seeking financial advice. Here are some tips to help you. Nine out of ten Australians who have used a financial planner have benefited from the experience, according to Financial Planning Association (FPA) research 1. But the majority of Australians have never used a financial planner many simply don t know how to set about finding the right one. 1 FPA Consumer Attitudes to Financial Planning study, Galaxy Research April 07

3 Choose a committed financial planning professional who is a member of the FPA All practising financial planners must be licensed, but it s sensible to look for one who is also a member of a professional association the FPA is the peak body for financial planning in Australia. All FPA practising members are committed to a code of ethics and rules of professional conduct, over and above what is required by law. They must also undertake continuing professional development. Use the FPA s Find a Planner service at This service helps you identify FPA members in your local area. It includes contact details for over 5,500 CERTIFIED FINANCIAL PLANNER TM professionals across Australia. Ask a friend for a referral Referrals from friends who have had a good experience with a financial planner can be the best and easiest way to find one that suits your needs. FPA research shows that over half the people who used a financial planner were referred by a friend. Talk to a CFP professional CFP certification is the global symbol of excellence in financial planning. The CFP Mark is awarded to individuals who have gone beyond the competency, ethics and professional practice standards required of other FPA practitioner members. Each year CFP professionals must renew their right to use the Mark., CFP and CERTIFIED FINANCIAL PLANNER are certification marks owned outside the U.S. by the Financial Planning Standards Board Ltd and used by the FPA under licence.

4 Look for someone you can trust You share a lot of confidential information with your planner and need to be able to take him or her completely into your confidence, and establish a relationship of trust. Your financial planner should be open, well informed, professional and a good listener. Based on the information you provide, a planner will produce a Statement of Advice outlining your current position and recommending a strategy for achieving your goals. Be prepared Prepare for your first appointment with notes on your financial goals and what you want from your planner. You don t need to go into too much detail at a first exploratory meeting, but you should be prepared to provide your chosen planner with all relevant information about your income, debts, what you own, and your future financial expectations. Ask questions Ask questions about the financial planner s qualifications, experience, area of specialisation and what they expect to be able to do for you. Also question how they charge (for example, up-front fees, commission, or a combination of both). See the next section for more on the types of questions to ask a planner. Do a bit of background reading If you feel you need to know a bit more, Money Well Spent is a quick read that gives the key facts about financial advice. Getting Advice is a practical guide to finding the right financial planner and advice that works for you. Both publications, and more, can be downloaded from the FPA website, or call freecall for free copies.

5 Ten questions to ask a prospective financial planner Take your time finding a planner and do some research. Aim to talk with a few different planners before you decide on one. If you ve followed our tips, then you would have made sure that your prospective planner is a member of the FPA, and perhaps even a CFP professional. Whenever you talk with a prospective financial planner, it s good to ask lots of questions. We ve put together a list of 10 specific questions to use when interviewing a planner. 1 Can I see your Financial Services Guide? The Financial Services Guide (FSG) explains the nature of the financial services being offered, the fees and commissions charged and how the person providing the service deals with customer complaints. A financial planner is required by law to give a client a FSG before providing any financial advice. 2 How long have you been a financial planner? The more experience the better. If the planner has less than two years experience, ask if someone else within the financial planning business would take a look at the advice as well. 3 What do you specialise in? Some planners specialise in certain areas retirement planning, high net worth planning and so on. You should also ask if the planner will implement the plan or refer it to someone else.

6 4 What kinds of clients do you mostly see? Find out a bit about the types of people a planner advises. Ask a few questions about the planner s approach to ensure they are in tune with your lifestyle and needs. You should look for someone who regularly works with people in your situation with similar concerns like yours e.g. taxation, super, retirement planning or social security. 5 How do you charge for your services? The planner should be able to give you an estimate of the cost of advice based on the work you are asking for and the options for paying. The planner must, by law, let a client know all the costs and sources of potential income to them arising from the financial plan, e.g. if they receive payments arising from financial products being recommended. 6 Will I receive written advice? By law, the financial planner must provide a written Statement of Advice if personal financial advice has been given. The SoA should include: The advice the planner has given the client The information on which it is based How they get paid (including any commissions) Any interests, associations or relationships that could influence the advice given. 7 How often will you review my advice and what will it cost me? Every plan needs to be reviewed, so you should ask how much the planner will charge for ongoing reviews and how often they will be carried out. As your goals and life changes, so should your plan. 8 If I have any issues with the planner s strategy how will they be resolved? You should ask at the beginning what happens if you don t want to accept the planner s advice; at what stage you become obliged to make a payment; and what happens should you want to terminate the planner s services.

7 9 Who authorises you to give advice and are you licensed by ASIC? Ownership of your financial planner s business can influence the services and products you re offered. Many advisory businesses are owned by major financial institutions like banks, fund managers and life insurance companies. Even if they operate under a different name, the FSG will tell you if they re owned or associated with other companies. Other financial advisory businesses are independently owned. Both work under the same legal requirements to give appropriate advice to their clients. In fact, by law, any person or company that provides personal financial advice is required to have an Australian Financial Services Licence (AFSL) issued by ASIC or be authorised by a licensee. 10 How does the planner keep up-to-date with everything that s happening? If you re talking to an FPA member, then you will already know that they are committed to high professional standards and a code of ethics. But it s a good idea to hear how a planner keeps abreast of issues through courses and training run by universities, associations and other professional bodies.

8 You can find out more about financial advice by contacting the Financial Planning Association on or visiting the website at