What questions should you ask your financial adviser?

When dealing with a financial adviser, it’s important to gather all necessary information to make informed decisions about whether or not they are a good fit for you.

Whether you’re a seasoned investor or a first-time seeker of financial expertise, arm yourself with the knowledge to engage effectively with an adviser and gain valuable insights that align with your financial goals. Here are some questions you might consider asking. We’ve categorised them by topic, so you can refer to them easily.

Experience & credentials

How long have you been in the financial industry?

The more experience your adviser has, the greater their insight into market trends, tax, superannuation options, investment instruments, Centrelink benefits, and risk management strategies. This experience can prove invaluable when making critical financial decisions.

What credentials, licences or certifications do you hold?

Before selecting your financial adviser, make sure that they have the necessary certification and qualifications. At the very least, they should be a Certified Financial Planner (CFP). This accreditation ensures that your adviser has the appropriate knowledge and ethical framework to provide financial advice. Additionally, they should have a financial-related degree with specialities in Commerce, Economics, Accounting, Business or Financial Planning. In Australia, you can check ASIC’s financial adviser register to ensure that your financial planner is licensed to give advice.

Are you a member of any industry associations and/or professional bodies?

Financial planners in Australia who are members of the Financial Advice Association of Australia (FAAA formerly known as the FPA) are required to follow the FAAA Code of Professional Conduct. Their membership in the FAAA can give you confidence that they will provide advice that is in your best interest.

Areas of specialisation

What types of financial advice do you specialise in?

Naturally, it’s vital to seek advice from an adviser who specialises in the area you need assistance with. This could be investment portfolio growth and management, long-term financial planning, superannuation, insurance, retirement planning, aged care advice, estate planning or self-managed super fund management. If you need help with more than one of these, you may find an adviser who covers the lot, or they may refer you to a specialist in one or other of the fields.

What types of clients do you advise?

Some financial advisers specialise in assisting older clients with retirement planning, others help women who are starting over after a divorce, or young high-earning couples who want to future-proof their lifestyles.

Have you handled situations similar to mine before?

While everyone’s circumstances are unique, there are similarities and hiring an adviser who has helped people in similar circumstances makes things easier. They will have a better insight into your situation and will know what works best for you. And you’ll have the peace of mind of knowing that you can rely on their judgement.

Process

What is your process for working with clients?

Financial advisers may also choose different ways to interact with clients, working face to face, over the phone or via video-chat. Some advisers may use a mix of all of these, depending on the client and the situation.

Face to face or live online video meetings (if face to face is not possible) are the best way to handle more complex financial scenarios. It provides a dedicated expert who will partner with you throughout your financial journey.

How much access will I have to my adviser?

Find out how often you’ll meet with your adviser and whether they’re available for phone calls or emails outside of scheduled appointments.

What timeline do you follow?

It may take some time from the initial meeting until the adviser provides you with your financial plan. If time is of the essence, it pays to find out how long things will take up front.

Will you provide one-off advice and/or ongoing management of my portfolio?

Some Financial advisers may provide one-off advice or ongoing portfolio management services or both. It’s important to be clear about what you want and find an adviser that is a good fit for your needs.

Fees & costs

What are your fees and how are they structured?

Financial advisers in Australia generally follow one of five forms of remuneration. Upfront commission, hybrid commission, level commission, salaried employee (no commission) or fee-for-service (no commission).

Fee-for-service advisers might charge a percentage of the assets they manage for you, a flat fee for services or an hourly rate. They don’t get commission for selling particular products, which means they are more likely to be looking out for your best interests rather than pushing a particular product.

Are you a fiduciary?

Another important thing to check in this regard is whether your adviser is fiduciary. Financial advisers who are fiduciary have an obligation to work in the best interest of their clients, only recommending investments that are the best fit for your particular circumstances.

Other types of “product advisers” and “financial sales people” and other non-fiduciaries do not recognise this obligation. They need only recommend “suitable” products and may do so, even if such products are not the most cost-effective or the best option for you.

Are there any additional costs?

There will likely be other fees in addition to paying your financial adviser, and it’s best to be informed of these up front. If neglected these fees can take a huge chunk out of your savings over time, so it pays to keep an eye on them.

Investments

What’s your investment philosophy?

You should look for a financial adviser who aligns with your investment style. If their investment management philosophy leans towards active investing, for example, you need to feel comfortable with that approach. If you don’t, move on to an adviser who shares your values.

What asset allocation will you use?

This question tells you how diversified your portfolio will be under a particular financial adviser. Diversification is good because it spreads risk and increases returns.

What investment benchmarks do you use?

Your chosen financial adviser should use benchmarks that directly relate to the investments they choose, or at least they should be able to explain why they don’t.

What tax hit do I face if I invest with you?

Make sure that your financial advisor has your tax bill in mind when making investment decisions. Asking about taxes and fees at the front end of the deal gives you a clearer idea of what your estimated net returns might be.

Client references or testimonials

Don’t be shy to ask for references or testimonials from previous or existing clients and check the online reviews for your proposed adviser.

Ready to take the first step towards prosperity?

The only thing the financial advisers at Stellar Wealth love more than getting great results for our clients, is answering questions and discussing the possibilities. Reach out to our friendly team today for a frank discussion that will help you decide whether we’re a good fit for you.