How to choose a Financial Planner

How to choose a Financial Planner

Find a local Financial Planner

Find a local Financial Planner using the industry’s professional association, The Financial Planning Association,  Members of the FPA must adhere to professional standards and the FPA’s code of ethics.

Check the Financial Planner’s Qualifications and Experience

The minimum qualification your adviser should have is an Advanced Diploma in Financial Planning.  A relevant degree is a higher qualification level than a diploma.  Like any discipline, the more experience the better.  Advisers with more experience have been through more market cycles and will be more familiar with different types of investments.  In most cases I’m dealing with people’s life savings and I feel that my 20 years + experience is highly beneficial.

Check the Financial Advisers register

Advisers must be operating under a licence – if they are not, they are breaking the law and there will be little or no protection for  you if poor advice is given.  The register will also identify the advisers licensee, any disciplinary action taken against them, their experience, qualifications, and membership of professional bodies.

Do you have rapport with the Financial Planner?

Ideally you’ll want to meet the financial planner several times before committing to the ‘Statement of Advice’, much like going on a date – you want to know you’ll be comfortable with your adviser because, in many cases, this is a relationship that is not for a few months, it’s likely to be a decades-long relationship, so choose someone you like!

How does the Financial Adviser charge fees?

There are two main phases of advice – constructing a ‘Statement of Advice’ (SOA) and ongoing management.

Ask the financial adviser how much the initial fee will be for the SOA (generally between $1,000 and $3,000 depending on complexity) and how much they charge to manage your funds on an ongoing basis. The most transparent fee structure is a flat fee rather than a percentage-based fee of the funds invested, so you know exactly what you’re paying.  Generally, due to increasing compliance and regulatory burdens, an adviser would have to charge a minimum of $2,000 p.a. to warrant an ‘ongoing advice’ relationship.

A Financial Services and Credit Guide will identify the fees the adviser charges.