Making the decision to engage the services of a financial adviser can be daunting. When you start to focus on your finances and think about what you want your future to look like, it is very important that you find the right person to help you along your path.
With so much media focused on the financial industry over the last few years, you want to make sure you find someone you can rely on… who will work with you to reach your goals. We have some suggestions about the qualities you should consider when looking for an adviser to help you along your financial journey.
Someone you can trust
The number one attribute your financial adviser must have is integrity. As you build your relationship with them, their position of trust increases.
You are relying on them to provide you with sound advice that aligns with the investment approach you agreed upon. They are looking after your money and your strategic financial decisions, so you want to make sure your trust is warranted.
It is critical that the firm your adviser works for has strong ethics and a solid reputation… and your adviser should always perform their role with your desired outcomes in mind.
It is a good idea to be wary of any organisation that recommends products that are related to their own corporate group, as these may not always be in the best interest of the client.
In fact, there have been cases in the media recently where advice firms have recommended their clients invest in in-house funds where the related business is paid an additional fee to manage that investment. This creates a conflict of interest because objectivity is removed when there is a benefit for the adviser to recommend a specific product. It’s important to gain full disclosure from your adviser about the source of any investments you make.
Ilana Donde, Operations Manager, explains,
“It’s important to find an adviser who isn’t selling their own products… they should be completely separate from the products they are offering… so that you know the product you are being recommended is actually what’s best for you.”
In-house products can also cause issues when many clients from the firm want to exit a fund at the same time. In order to return cash to the exiting investors, investments within the fund must be sold down, potentially at a significant loss. This can cause liquidity issues and means the value of the fund may decrease significantly.
While the recent royal commission into financial services has highlighted some of these cases, it’s important to remember there are still many firms in the industry who have exemplary work principles and are not involved with making or managing financial products.
The right qualifications
It goes without saying that a financial adviser should have appropriate qualifications. They must have the right education and experience to be able to provide you with the quality advice that you need.
If you are unsure about whether the person you have engaged has adequate qualifications, you can view their details on the ASIC Moneysmart website. There is a financial adviser register where you can check their training and employment history along with their current appointment status. You are also able to find out if they have ever had any disciplinary action taken against them.
At First Financial, our team members often advance through different roles within the firm and gain valuable experience before they become financial advisers.
“We invest in significant in-house training and most advisers spend four to five years in an assistant position, working closely with a qualified adviser, before they are ready to take on clients of their own.”
A true passion
When you are looking for a financial adviser you want to find someone who is passionate about what they do. If they truly enjoy their profession, they are more likely to be aware of the most up to date strategies or investment trends within the industry. They would be more inclined to spend their own time researching investment markets and continually absorbing new information.
Their passion motivates them to provide a higher level of service and they consequently offer you a more positive experience as their client. When you talk to them about financial planning, you should be able to see their enthusiasm for their work as they reveal their extensive knowledge.
Communicate with clarity
It is imperative that you understand the topics that you discuss with your financial adviser. Your adviser should have the ability to clearly explain concepts and strategies, no matter how complicated.
This clarity in communication is a key skill and should be high on your list of ‘adviser must-haves’.
We recommend finding someone who can discuss issues in a manner that is relevant to you. They should use minimal industry jargon, or if they do employ specific terminology, they should always take the time to clarify what they mean.
This clarity also extends to good listening skills. Ilana explains how this is embraced at First Financial.
“We often say that the client should be talking more than the adviser during a conversation. That’s because it’s very important that the adviser is listening and taking everything on board so that they can formulate the best strategy to meet the client’s needs.
It’s also important that they are able to explain the strategy they are recommending and show how it’s actually going to help meet the client’s goals. Plus, they have to be able to explain any risks within the strategy and what the implications are of the advice.
It’s a valuable skill set to have… to be able to talk to clients and explain complicated strategies in a simple way!”
Make a connection
The final suggestion we have when looking for a financial adviser is to consider the connection you make with them. You want to get along well with them and develop a good rapport. Ideally, the relationship you build with your adviser will last many years into the future, so you want to be confident in a long-term partnership. Ilana says,
“They are going to take you on a journey all the way through to retirement, which could be up to 20 or 30 years away… when you meet with that person you want to feel like it is someone you can develop a good relationship with and create a strong foundation of trust.”