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Your Guide to Finding the Best Financial Planner – Part 2

Your Guide to Finding the Best Financial Planner – Part 2

Following on from last week’s discussion on when it’s time to speak to a financial adviser, I’ll go through the different types of advice you can receive and how to choose the best expert for you.

Depending on your situation, you will be looking at one of three forms of advice:

A one-off issue

You may have come into a bit of money or want to figure out the best way to consolidate your super funds. A one-off, fee-for-service visit to a financial adviser should cover this.

A long-term plan

If you’re establishing a specific strategy for your financial future – including investing in the share market, tax advice or buying a house – an experienced and knowledgeable financial planner can provide valuable advice.

Unless your financial life is complicated, a single visit that you’ve prepared well for should set you on the right course.

Ongoing advice

This is only necessary if you have substantial assets and a sizable investment portfolio. If your financial situation has a fair few moving parts, you’ll want ongoing advice about the best strategy to meet your goals.

In any event, make sure the adviser is not making recommendations based on commissions and make sure you receive regular statements that clearly outline what you’re paying for.

Not all Financial Advisers Were Made Equal

As a starting point, always ensure a planner is licensed to provide advice or is the authorised representative of a financial services licence holder. NOTE: licence holders have to register with ASIC.

Let’s compare the quality of advice provided by banks, large financial planning chains, small planning companies and stockbrokers:

Stockbrokers

Brokers have a tendancy to recommend shares and overlook other essential issues such as assessing the client’s needs and goals.

Method of payment

Planners who worked for a fee or a combination of fee and commission often provided better advice than those who worked on a commission-only basis.

Market segmentation

Shop around to find a planner that’s right for you. In particular, ask if the planner provides comprehensive advice or if they’re an investment and placement service only.

Here’s What You Need To Do:

  • Prepare a household budget detailing all sources of income.
  • Make a list of all assets, their value, and all liabilities.
  • Make a list of your financial needs and goals for the short, medium and long term.
  • Learn as much as you can about different investments and markets.
  • Make a list of all existing investments, including their current value, past performance, and fees.
  • Get up to speed on information your planner may not have access to, (does your employer allow you to ‘salary sacrifice,’ what are your options in your existing super fund etc.)
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