In the aftermath of the storm that hit the financial planning industry following Commissioner Haynes’s 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 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 a 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: Any information provided to you was purely factual in nature. It has not been taken into account your personal objectives, situation or needs. The information is objectively ascertainable and is not intended to imply any recommendation or opinion about a financial product. This does not constitute financial product advice under the Corporations Act 2001 (Cth). It is recommended that you obtain financial product advice before making any decision on a financial product such as a decision to purchase or invest in a financial product. Please contact us if you would like to obtain financial product advice.