5 Questions To Ask Your Financial Planner

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When seeking out financial advice, it is important to ask these five questions.


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How Do You Charge For Your Services?

In Australia there are a number of remuneration structures which exist for Financial Planners. Ensure you are aware of how your Financial Planner gets paid and that they act in your best interests.  The following five methods are the main form of remuneration for Financial Planner in Australia.

  • Upfront Commission: This is generally an upfront commission of 100% to 130% of the new business premium and an ongoing commission around 10% of renewal premiums.
  • Hybrid Commission: This is generally an upfront commission of 170% of the new business premium and an ongoing commission of around 20% of renewal premiums.
  • Level Commission: This is generally a flat rate upfront commission of around 30% on the new business premium and an ongoing commission of around 30% of renewal premiums. 
  • No Commission (Fee-For-Service): This includes fee-for-service remuneration arrangements, where typically the adviser would rebate any commission paid by an insurer back to the client and the client would pay a fee for service, as negotiated between the adviser and the client, which would vary depending on the nature, scope and complexity of the advice provided to the client.
  • Salaried Employee: Remuneration is not by commission.

Source: ASIC (2014) Review of Retail Life Insurance Advice, Report 413


What Type Of Clients Do You Specialise In?

It is important to identify the most important aspects you need advice in and find an adviser who specialises in this area.  Certain area's may include;

  • Investments
  • Insurance
  • Estate Planning
  • Budgeting
  • Retirement Planning
  • Saving for a goal
  • Tax preparation

What Services Do You Provide?

The most appropriate way to get advice depends on your needs, your personal preference and what is most practical for you.  You should identify if you would like one-off or ongoing advice. That will help you with your choice of level of service. There are four main way's in which Financial Planners in Australia deliver their services, face-to-face, phone-based, video-chat and Robo-advice.  

Face-to-face is the best way to achieve a holistic approach to more complex situations. This ensures you have a dedicated expert helping you achieve your financial goals on an ongoing basis.

Phone-based advice is generally suitable for one off personal advice or general advice.  

If you live in a remote area, or are quite a distance from your chosen Financial Planner, it would be worth asking if they can provide advice via video-chat advice.

Finally, Robo-advice is an automated online service which uses technology to replace a human financial advisor.


What licences and credentials do you have?

When choosing the right financial planner for you, you should ensure that they have the correct education and qualifications and that they are industry regulated.

The first sign of credibility and someone who operates with the highest ethical standards is someone who is a Certified Financial Planner (CFP).  The CFP qualification is recognised in over 26 countries around the world and ensures that the person giving you financial advice upholds the appropriate knowledge and ethical framework to guide you through your financial journey.  Your financial planner should also have finance related degree in specialties such as Commerce, Economics, Accounting, Business or Financial Planning.

Always check that your Financial Planner is licensed to give advice.  You can check a Financial Planner's licensing on ASIC's financial adviser register.  You can also see their qualifications and memberships of professional associations.


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

In Australia, the professional association for Financial Planners is the Financial Planning Association (FPA).  To be a member of the FPA, it is required that the financial planner follows the FPA Code of Professional Practice, so you know that as a consumer, you are receiving the best possible advice.  

 

To talk to a Certified Financial Planner