How to choose a
financial planner
Helpful tips on choosing
a financial planner
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)
research1. But the majority of Australians
have never used a financial planner –
many simply don’t know how to set
about finding the right one.
1FPA Consumer Attitudes to Financial Planning study,
Galaxy Research April 07
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
www.fpa.asn.au
This service helps you identify FPA members in your local
area. It includes contact details for over 5,500 CERTIFIED
FINANCIAL PLANNERTM 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.
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, www.fpa.asn.au,
or call freecall 1800 626 393 for free copies.
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.
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.
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.
You can find out more about financial
advice by contacting the Financial
Planning Association on 1800 626 393
or visiting the website at www.fpa.asn.au