In the aftermath of the storm that hit the financial planning industry following Commissioner Haynes report on the financial services royal commission, which saw several big institutions exit the financial planning business, the one question that clients are (and should always have been) asking is – who is my Financial Adviser working for?
Although one would think the answer to that should be a straightforward and resounding – You, the client. Unfortunately, information that has since been made public indicates this may not always be the case. So how do you know?
Here are some of the things that could potentially highlight that your Financial Adviser is not necessarily working in your best interest or working for you – if he/she:
- Focuses on products: Your Adviser may end up focusing on financial products, as opposed to your goals and objectives. It is important to remember that products are simply a means to an end, and not the purpose of financial advice. The focus at all times should be your goals, objectives and current situation.
- Is in a rush to sign you up: This is the outcome of a ruthless sales culture where the focus is to sign up a client without being confident of the value you can provide to them. Your Financial Adviser should be able to communicate to you clearly the areas where they can add value and equally, if they believe that your interests are not best served by engaging them.
- Discourages any questions: Your Financial Adviser should be encouraged by your questions, as they provide an opportunity to engage and educate. Any obvious or subtle efforts to quell questions should immediately raise red flags.
- Lacks transparency: Before providing you with financial advice, an Adviser should offer you a clear and transparent Terms of Engagement with clearly scoped out service arrangement, as well as fees and costs.
- Hesitates to state the truth: A Financial Adviser who hesitates to tell you the truth, and nothing but the truth, does you great disservice by not only keeping you in the dark but also by not taking steps to address areas of concern, thereby ensuring your situation does not improve. Your financial Adviser must not shy away from putting hard facts in front of you while still demonstrating empathy.
- Does not spend time educating you: Your Financial Adviser is also your financial coach, constantly updating and equipping you by providing all pertinent information to be able to make an informed decision.
The above is by no means an exhaustive list of things to consider, but it does capture some key things to consider before you engage a Financial Adviser. This will go a long way in ensuring that you experience a long and successful relationship with your Financial Adviser.
Niyati Khanna | CFP Professional, Chartered Accountant (ICAI), MBA (Finance & Strategy) is a representative of Alman Partners Pty Ltd, Australian Financial Services Licence No: 222107.
Note: This material is provided for information only. No account has been taken of the objectives, financial situation or needs of any particular person or entity. Accordingly, to the extent that this material may constitute general financial product advice, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. This is not an offer or recommendation to buy or sell securities or other financial products, nor a solicitation for deposits or other business, whether directly or indirectly.