11 Crucial Questions to Ask Your Financial Advisor

All licensed financial advisers in Australia offer financial planning services but not all of them may be sufficiently experienced or qualified or meet your requirements. How do you set apart excellent financial advisers from those that are not?

One way is to prepare a list of crucial questions to ask the financial advisers you are prospecting to engage with. Knowing the answers to these queries will help you decide which financial adviser is suited for you.

1. Are you a certified financial planner?

If they are unauthorised by the Australian Securities and Investment Commission (ASIC), inquire why. Also, examine whether they are members of a professional organisation, such as the Financial Planning Association of Australia.

2. Does your investment plan suit your client’s risk tolerance?

A savvy financial planner will examine your existing financial condition and determine how much risk you can tolerate at this time. This factor will influence how your portfolio is built.

3. Are you always a fiduciary, and if so, would you put it in writing?

Australia’s financial planners are compelled by law to operate in the best interests of their clients.

4. Are your fees refundable, and will you provide a written breakdown of all charges?

Clients should be charged in the same way. Whether you’re in the same circle or not good with negotiating fees, you should be charged how their other clients are charged. Moreover, the law requires all fees and costs to be itemised in writing.

5. Will you charge an hourly or retainer fee or annually?

You can charge an hourly fee if it’s for a one-time project only. However, hourly billing can promote inefficiency, so almost all advisers charge based on the magnitude of assets they handle.

6. Do you only provide investment advice, or do you also offer advice on taxes, estate planning and more?

Most financial advisers have a network of professionals offering services regarding taxes, estate planning, debt management and the like. Since these are separate services, payment would have to be made to these professionals, not to your financial adviser. However, some advisers also offer these in their list of services.

7. Are there any conflicts of interest?

If there are, evaluate if you can work with these conflicts of interest. These must then be communicated both orally and in writing. Otherwise, look for someone else.

8. How do you report on the performance of your investments?

This question is crucial and often a deal breaker, as the phrase “we do not benchmark” is a major red flag. All investment returns (after costs) should be available at any moment and for any length of time.

9. Who owns your company and oversees finances?

To be specific, ask if the owner of the company also offers financial products. When the financial adviser is affiliated with a particular financial product, it can be difficult to trust their advice. They can be biased because they are paid to sell you these products. Of course, it’s still up to you if you’re comfortable working with a financial adviser connected with a financial product.

10. How do I opt-out in case I’m not satisfied with your services?

If you’re not with their services, you only have to tell them nicely that you need to work with someone else. Otherwise, that’s one major red flag again.

11. Can you give me client testimonials?

We always look for reviews before buying a product, so why should it be any different when looking for a financial adviser? Make sure to always ask for client testimonials.

In addition, request a copy of ASIC’s Adviser Register. If they refuse, they may be hiding something, so it’s better to just look for one that ticks all the boxes.

Talk to the Experts Now!

These are just some essential factors you need to know before deciding on a financial adviser.

Ask around for recommendations, and do your due diligence by using this guide to assess potential advisors. Remember, your financial advisor will be helpful in your financial decisions and your future, so only work with the best.

If you’re looking for a trusted financial consultant in Newcastle, Newcastle Financial Planning Group has you covered. We will answer all these questions honestly, and you can expect nothing less than first-rate services. Request a consultation now!

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DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.