How to find the best financial advisor – Forbes Advisor Australia

In addition to establishing that your prospective financial advisor is indeed licensed and registered to provide financial advice, there are other important factors to consider.

Consider what you hope to get from financial advice

Often, people turn to financial advice when they are in a life changing season, such as starting a family, planning for retirement, or after receiving an inheritance. You can also consult a financial advisor when trying to get out of debt or if you want to become more aware of your long-term investment skills.

When choosing a counselor, it is important to consider the stage of life and what you want to achieve from the counsel. Consider your short- and long-term goals and how long you plan to want to work with a financial advisor.

Check out their guide to financial services

“When looking for an advisor, be sure to read your advisor’s Financial Services Guide to learn about their fees and services and how they handle complaints,” an ASIC spokesperson tells Forbes Advisor.

These are usually listed on a financial advisor’s website, or you can request a copy before discussing any deal with them.

A financial services guide will show the services offered by a financial advisor; how they charge their taxes; who owns the company; any links to product suppliers; and their AFS license number.

Make sure you are aware of the fees

Financial advisors charge varying fees depending on their services and the type of advice you are looking for. It’s important to compare the fees charged by different consultants to make sure you get a good deal, advises an ASIC spokesperson.

As Moneysmart explains, these are usually broken down into fixed fees, percentage based fees, and fees.

Fixed fees commonly include: a one-time advisory declaration fee (SOA); a one-off fee for the implementation of financial advice; ongoing compensation (usually charged on a monthly basis) for their advice and services; a one-off fee for reviewing the financial plan; a fixed hourly rate for answering questions that are not part of the ongoing consultation; and other fixed rates dependent on additional services.

Some financial advisors also charge an early termination fee, if you have entered into an ongoing agreement but decide to terminate that agreement before the agreed end date.

Percentage-based fees also need to be disclosed by your financial advisor. These usually include an asset-based percentage fee, which is a fee based on the total value of your current portfolio (the higher the value of the assets you have the greater the commission). This commission is paid regardless of the return on your investments.

If your assets are performing well, you will also be required to pay an investment management fee. It is an additional percentage fee based on the performance of your investments and is usually set by a pre-discussed benchmark when your deal is starting.

Be prepared for questions

When speaking to a potential financial advisor, they will need information about your personal situation to understand if they are in the best position to help you. You should also have questions that you can ask any potential consultant to make sure you believe they also meet your needs.

When meeting a consultant, ask them:

  1. Who is your main customer base and what are your areas of specialization?
  2. How often will we meet or be in contact and what information will I receive at each meeting?
  3. How will you monitor and manage my investments and how will I be consulted on decisions?
  4. Do you receive commissions or incentives from certain financial products? How will you choose which products and services to recommend to me?
  5. Who will manage my account when you are away?
  6. If I choose to terminate our contract, what will the process entail? Are there any penalties or notice periods I should be aware of?

Protect your money

Engaging with a financial advisor is still a risk, even if they are fully qualified, as you are giving someone else some control over your finances.

To protect your money, ASIC recommends that you pay attention to how much access your advisor has to your investment accounts and notify your advisor if you are dissatisfied or worried about their services.

Other precautions recommended by the ASIC are:

  • Do not give power of attorney to your consultant;
  • Never sign a blank document;
  • Set a time limit on any authority you grant to buy and sell investments on your behalf;
  • You insist that all correspondence about your investments be sent to you, not just your advisor;
  • Keep all your electronic documents and files in one place;
  • For investments, make checks or wire transfers payable to the product provider (not your advisor) e
  • Check your transactions regularly if you have an investment account or use an investment platform

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