Simple steps for choosing a great financial adviser

Choosing the right person to look after your financial future and life goals is a big decision. Many people don’t know where to start in finding financial guidance they can trust. While it’s important for everyone to be on top of their finances, trying to figure everything out on your own can sometimes lead to the wrong outcomes and significant frustration.  

This is where specialist advice can help. Financial advisers have academic qualifications, regular professional development and many are members of professional associations like the Financial Advice Association of Australia (FAAA) with a Professional Code of Ethics to follow. A good financial adviser offers personalised guidance, helping you plan and invest with confidence. This can lead to better financial outcomes, less stress about the future, and an improved quality of life. 

The right adviser should be with you for the long term, so if you’ve decided that you would benefit from financial help and advice, here are three steps to consider before entering into the relationship.  

Step 1 – Don’t limit yourself to just the one option 

It’s highly recommended to speak with multiple advisers before making a choice. All those you meet with might be great advisers, but you need to make sure you are comfortable with the way they engage with you.  

If you think you’re not going to be right for you in the long-term, you might want to look elsewhere. 

A great way to begin your search is by asking for recommendations from friends and colleagues. This is especially beneficial when you choose people whose financial situations are similar to your own. Even your accountant or other trusted professionals should be able to assist in pointing you to the right people.   

The FAAA website offers an excellent resource called Find a Planner. This tool allows you to search for an adviser in your region based on their area of expertise, years of experience, age, gender, and even their meeting options. 

Finally, and importantly, always check the background and disciplinary history of each candidate on the financial advisers register on ASIC’s Money smart website. This will provide information on their financial adviser status, qualifications, and more and will give you confidence in their reputation and ability. 

Step 2 – Understand your needs and ask the right questions 

A top adviser excels in four areas: they can demonstrate relevant expertise in your situation, their interests align perfectly with yours, they have strong client relationships, and they deliver clear value for money. 

To evaluate potential advisers, be ready to briefly outline your situation. Then, ask these questions: 

• Expertise - What’s your specialty (e.g., retirement, investments)? What experience do you have experience with situations like mine? 

• Process - What services do you offer? How do you typically work with clients? How many meetings will we have each year and what can I expect you to do for me on an ongoing basis. 

• Fees - How are you compensated (fixed fee, percentage, commission)? What are typical fees for someone like me? Will I get a written fee breakdown? Are there other investment costs? 

• Transparency - Any relationships with product providers? Any other conflicts of interest? 

• Approach – What’s your investment philosophy? What sort of products do you normally advise on? 

• Support – Do you work alone or with a team? How do you help clients stay on track? 

Step 3 – What to look out for 

When evaluating your financial adviser, here are some attributes to look out for. 

• Willingness to explain - A good adviser takes an educational approach and takes the time to explain things to you. They patiently answer all your questions, no matter how basic, and explain complex financial concepts in an understandable way. If they get annoyed, defensive, or dismissive when you ask for clarification, it’s a bad sign. 

• A thorough understanding of you – Top advisers will ask lots of questions and gain a thorough understand of your situation before making recommendations. 

• Clear and easy to understand fee structure - A good adviser is transparent in how they get paid and confident with the value they add. If an advisor is hesitant to clearly explain how they are compensated, or if their fee structure seems overly complex and difficult to understand, that’s a major red flag. They should be able to break down all costs, including advice fees, percentage-based fees, transaction fees, commissions, and any other potential charges. Also be wary of advisors who offer “free” financial planning or investment advice. Often, compensation then involves products, which can create conflicts of interest. 

• Sets realistic expectations – Good advisers always set realistic expectations. No-one can guarantee specific returns, especially exceptionally high ones. Investing always carries risk, and market performance fluctuates. Promises of “guaranteed returns” or “we always beat the market” are highly suspicious. 

• Gives you time to make decisions - Top advisers guide you to good choices and then allow you the time to make your own decisions. If an advisor pressures you to make quick decisions, especially to start a SMSF or to an investment that sounds too good to be true, walk away. 

• Professional designations and memberships - While not a green flag on their own, professional designations, qualifications or association memberships may indicate specialised knowledge or commitment to professional standards.  

• Limited conflicts of interest – A good adviser will have access to a wide array of product options and recommend those that are best for you. If an advisor exclusively recommends investment products from an associated company, it could be a sign that their interests are not aligned with yours.  

• Switching - Consolidating accounts can sometimes be beneficial. However, an adviser who insists you transfer all your assets to them without a clear, well-explained rationale that makes sense, is concerning. 

By taking the time to research, interview, and thoroughly vet potential advisers, you can find a trusted partner who will help you navigate complex financial decisions and achieve your long-term financial goals.  

But don’t stop being on top of your own financial position – make sure you know what you have and where it is regularly. Your adviser is a trusted partner, you have a role to play also. 

Remember, a good financial adviser is not just an expense, but an investment in your peace of mind and financial well-being and your partner on achieving all your life goals.  

Meet Tony at wetalkmoney or Find a Planner near you!

The Money & Life website is operated by the Financial Advice Association Australia (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.