5 Things You Should Know About Choosing a Financial Adviser


So, you’ve decided to get serious about money and growing your wealth. This is where the right financial adviser can really help - clarifying your goals, setting your strategy, getting you started and keeping you on track.

Here are the top things to put on your checklist when looking for your partner in wealth matters:

Holds appropriate formal qualification and is licensed to practice

In Australia, the title “Financial Adviser” can legally only be used by specialist individuals who are appropriately licensed by the Australian Securities and Investment Commission (ASIC) – Australia’s corporate, markets and financial services regulator - to provide advice on investing, super, retirement planning, estate planning, risk management, insurance and/or taxation. The criteria to qualify for a licence to practice as a Financial Adviser is specific and ensures your adviser has the formal qualification and training as well as experience.

In Australia, it is illegal to provide financial advice unlicensed. If your prospective adviser is not operating under a licence, they are breaking the law. Remember, this may be so even if they are a registered tax agent and practice as SMSF specialists.

Fortunately ASIC has made it relatively easy for you to find out if your prospective adviser is licensed to practice. To check, go to ASIC’s Financial Advisers Register.

Is a member of a well-regarded financial services professional association

The top professional associations for the industry such as the Financial Planning Association of Australia (FPA) have codes of conduct as a condition of membership, which require members to exhibit ethical behaviours in the provision of advice and any practice dealings. Prior to acceptance as a member, applicants are required to pass stringent exams, including on ethics. Ensuring your prospective adviser is a member of industry best professional associations gives one way of identifying someone who has signed up to a code of conduct to do the right thing by you and usually also to participate in ongoing professional development to keep up with changes in their field of expertise.

To find out if your prospective adviser is a member of a professional association, check ASIC’s Financial Advisers Register. What are the association expectations of its members? Review the professional association website. For example, OakWealth advisers are members of the Financial Planning Association which has a comprehensive set of ethical principles, practice standards and conduct rules. Read more at the FPA website.

Has not been subject to disciplinary action by ASIC

How financial advice is provided in Australia is governed by Corporations Law. ASIC has wide powers to discipline advisers who have not acted in compliance with these laws. Make sure your prospective adviser has not been subject to disciplinary action by ASIC. Don’t take the risk with your hard-earned money.

If your prospective adviser has been subject to disciplinary action or banned by ASIC, this will be recorded on ASIC’s Financial Advisers Register.

What product areas the adviser is licensed to provide advice about

Not all advisers are trained and experienced to provide financial advice about all areas of financial advice. Advisers are only licensed to provide financial advice in their areas of expertise. For example, an adviser licensed to only provide advice on superannuation and insurance cannot provide advice relating to shares. Whereas, a holistic adviser will be licensed to provide advice on the full range of product areas, encompassing shares and securities, derivatives, super including SMSF, margin lending, deposit, debentures and bonds, insurance and retirement accounts. Holistic advisers will usually focus the advice on the overarching needs of the client, linking through to life goals and aspirations. Products are only discussed if/when required as a coherent part of the client’s overall wealth strategy.

Who controls the licence holder

There are often implications that the controller of the licence holder can sway the independence of the financial adviser when providing product advice but this one’s not what it seems. Let’s explore this further.

Under ASIC’s licensing regime, advisers do not license directly with ASIC but instead apply as an authorized representative of a licence holder. The licence holder may be the practice owner or it can also be large institutions that practice in the financial services industry as holders of Australian Financial Services Licenses (AFSL). As the responsibilities of an AFSL are many and varied, there are important considerations when making a decision to operate as an AFSL including ensuring the breadth of resources are available and therefore, deep pockets required to properly run a compliant AFSL. As such, typically, advisers choose to license as an authorized representative of an AFSL specializing in ensuring the provision of compliant financial advice.

A specialist AFSL provider provides the framework that advice practices can’t - ensuring ongoing education and development of advisers, professional practice management and compliance with the rapidly changing laws, rules and regulations governing the industry. Can AFSL providers sway their authorized representatives to sell product that benefit their other business interests? Not legally – under the law, advisers must operate in their client’s best interest. No exceptions. So at this checkpoint, we recommend you check for the depth of resources backing the AFSL the adviser is an authorized representative of. This is the depth of resources that goes towards ensuring your adviser is doing the right thing. And if not, that’s also the depth of resources available to ensure you are protected.

Fortunately ASIC has made it relatively easy for you to find most of this information in one place. To check ASIC’s Financial Advisers Register.

Did your prospective adviser make it through this checklist? Next post, we look at what else you can do to figure out if this is the right adviser for you. If you have just joined us – welcome! - and you might also want to check out our earlier post on Why I Need (and Want) a Financial Adviser.

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