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The Australian Securities and Investment Commission (ASIC) and the Financial Planning Association (FPA) have suggested a set of questions to help you choose a financial planner. Here are those questions... plus answers from Bill Sharp, director of Financial Life Planners.
1. Could I have a copy of your FSG?
The Financial Services Guide is a simple document all licensed advisers must provide you with. Among other things it spells out methods of payment for the planner's services and gives you details of their authority to advise as a license holder or authorized representative.
Click here to download (PDF 257KB) my FSG or request it at your first contact.
Download free Acrobat PDF reader here.
2. What is your approach to financial planning?
Ask the planner about the types of clients and financial institutions they typically like to work with. Some planners require you to have a certain net worth before offering services. Find out if the planner will carry out the financial recommendation developed for you or refer you to others who will do so.
Everyone is welcome to an initial complementary interview and from there we can both decide if a further meeting will be needed. My focus is broad, like a general practitioner and I cater to a wide range of clients and financial situations. Should I need to refer you to a legal, taxation or accounting specialist, then they will be responsible for the advice they give you. As a business we have many years experience as specialists in ethical investments.
3. How much do you charge?
Your financial planner should be able to provide you with an estimate of possible costs based on the work to be performed. Such costs would include the planner’s hourly rates or flat fees, or the percentage they would receive as commission on products you may purchase as part of the financial planning recommendations. Both fees and commissions are an acceptable method of payment. What is most important is that your financial planner clearly outlines all costs associated with their service and all their sources of income or other benefits received in relation to your specific plan. This is known as “full disclosure”.
Your first interview is complementary. Should you wish to continue to use our services there are two modes of payment. We usually receive remuneration directly from the wide range of product issuers whose product we recommend. If you prefer we can charge you an hourly fee. See Advisory Services Guide for details.
4. What do I need to know about risk?
Any investment involves ‘risk’ – the chance that you will not achieve your financial goals. Usually the higher the expected return on investments, the higher the risk. Your FPA practitioner member will determine your attitude to risk – how much you are prepared to take – before recommending any investments.
By listening to your concerns during your interview and using profile questionnaires we are able to recommend the best level of risk for your particular situation. At later reviews we will confirm this as with greater experience and knowledge it is not unusual for your risk profile to evolve.
5. Can I have a written plan?
You should ask your financial planner for a written plan or statement of advice (SOA) before agreeing to any investments. The written plan/SOA should mention the reasons as to why the planner is recommending this particular financial advice.
Should you decide to use our services you will be provided with a written plan. This contains our understanding of your current situation, what you want to achieve and how our recommendations will assist this. Also included will be a full disclosure of costs and research notes on each investment recommended.
6. Will my financial plan change as my circumstances and needs change?
The presentation of your written financial plan should signal the start of a rewarding relationship with your FPA practitioner member. Your financial goals may change over the years as your circumstances and lifestyle needs change. Your FPA practitioner member will assist you in regularly reviewing and, if necessary, revising your plan to reflect these changes and assist you in meeting your needs.
Regular reviews and answering your questions as they arise are part of our service. Receiving trailing commissions (0.2 to 0.6% pa) paid out of the management fees of most of your investments means we are able to structure our business to respond to these on-going needs.
7. How do you resolve any issues of dispute that may arise?
You should establish at the outset what happens if you do not accept your financial planners’s advice and at what stage you can terminate their services. FICS is an independent complaints resolution service for members’ clients. FICS is an approved ASIC dispute resolution scheme. All Principal members of the FPA are required to belong to FICS. FICS can be contacted via email at fics@fics.com.au or by telephone on 1800 335 405.
ASIC also has a free infoline which provides information for consumers about financial services, products and investors’ rights. ASIC can be contacted on 1300 300 630 or visit www.asic.gov.au.
Communication is the best way of making sure disputes don’t occur. If you have a problem talk to us first. If you feel it has not been resolved contact the Complaints Manager, Finacial Wisdom on 1800 024 684, even better put it in writing. If this still doesn’t get a satisfactory result contact FICS on 1800 335 405.
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