Five important questions retirees forget to ask their planner

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By Cath Sharples-Rushbrooke, CFP©, Strategic Financial Planning Consultant at Advice Services Australia

When dealing with a financial planner, retirees should always feel like they are able to ask as many questions as they need to. This will ensure that they are comfortable with the planner,   have a good understanding of the advice and why it is suitable for their needs. 

The planner should be open with their answers and clearly explain their experience, advice process, and any fees and charges. Retirees should never feel pressured into making a decision without having a complete understanding of what they are signing, and what the potential benefits and risks of the advice are. There are no silly questions!  It’s your life and it’s your money.

Here are five important questions retirees forget to ask their planner:

1. What makes you qualified to provide me with retirement planning advice (for example,  education and experience)?

  • Check the planner’s qualifications – a diploma, advanced diploma or degree qualification in finance, economics, accounting or financial planning in desirable.
  • Try to seek advice from a Certified Financial Planner (CFP) – CFPs have undertaken further study to attain the CFP designation, which is the highest financial planning qualification worldwide.
  • Ask about their years of service – have they been through market ups and downs, or through legislative change?
  • Gain an understanding of who their typical clients are – this will help you to judge whether the planner has the experience to deal with people who have similar issues and goals as you. For example, do they have other clients planning for retirement?
  • Check whether the planner is a member of the Financial Planning Association (FPA) – the leading professional body for financial planners in Australia. Members of the FPA must commit to ongoing education and meet higher professional and ethical standards than required by law.

2. Are you licensed to provide advice on the whole of my retirement situation and are you restricted to specific products?

  • Check that the planner is licensed to provide advice (are they listed on the Australian Securities and Investment Commission (ASIC) financial planner register?)
  • Check that the planner is authorised to provide advice under an ASIC-issued Australian Financial Services License (AFSL).
  • Check the scope of the planner’s authority. The planner should provide you with a Financial Services Guide (FSG) at the commencement of your relationship that lists the products and services they are authorised to provide advice on. Some planners are restricted to only providing advice on superannuation, which means they are unable to provide advice on your complete retirement picture. For example, investments outside super, Age Pension, debt, cash-flow management and insurance.
  • Check any product restrictions the planner has – do they prefer their firm’s own products or do they have access to a wide list of approved products?
  • If the planner has a conflict of interest in providing advice ask how they manage or minimise these conflicts. Understand the ownership ties of the licensee and how this may impact your advice.

3. What is your advice process?

  • Ensure that you are comfortable with the planner and the advice process.
  • Ensure that the planner takes time to get to know you, your goals and objectives, your circumstances and needs, your current situation and short and long-term financial goals.
  • Ensure that they are not providing you with a ‘one-size-fits-all’ solution.
  • The planner should discuss your goals with you and assist you with prioritising and refining your financial goals. The planner should let you know if your goals are not realistic.
  • When providing advice, a planner should provide you with a Statement of Advice or financial plan – this document should clearly explain your recommendations as well as the benefits and advantages, risks and disadvantages of the advice. 
  • Does the planner provide you with an ongoing review service – understand what is involved with this service. Are they offering strategic reviews, investment monitoring or regular information?
  • Ask yourself if you want one-off advice or to build a long-term relationship with a trusted planner? Over time investment markets, legislation, and your situation will change.  It’s important to ensure that you have a trusted professional in your corner.

4. What fees will I pay?

  • Planners must disclose all forms of payments and fees to you. 
  • The cost will usually depend on the complexity of your financial situation and plan, as well as the fee method the planner uses. Ensure that your fees are related to the advice that you are receiving and not the level of investments that you have.
  • The initial consultation is usually at no cost – other fees could include upfront fees, initial fees, plan fees, implementation fees, brokerage, commissions, administration fees and ongoing fees. 
  • Ensure that you understand how the fees are calculated and charged – are they flat fees or percentaged-based fees? Are they one-off fees or ongoing fees?
  • It is common for planners to charge ongoing advice fees for regularly reviewing your plan. Ensure that you understand what the planner is offering to provide you.
  • Ask how much the planner charges for their services in your first meeting.
  • Ask if the planner has a bonus structure that could influence the advice – some planners get bonuses based on the level of assets they place in a specific product, which could potentially influence the advice you receive.
  • If you have agreed to receive and pay for ongoing advice you should be receiving regular reports and reviews with your planner. If you are paying for ongoing advice, ensure that you are receiving ongoing advice. If you are not actually receiving the service do not continue to pay the fees.
  • Specifically ask if there are any hidden fees if you proceed with the advice, or fees for referrals the planner makes to third parties, so that you’re aware of these.

5. How do you keep up to date with changes that might affect your clients?

  • Ensure that your planner regularly undertakes professional development – this may include regular reading or attending courses, seminars and workshops.
  • Markets and legislation are constantly changing and you want your planner to be up to date with current trends that may affect your retirement.

One final piece of advice if you are considering engaging with a financial planner, don’t be afraid to shop around.  Meet with a number of planners until you find the right one for you.

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Total Comments: 5
  1. 0

    The only thing I’d ask is if you have any experience yourself and if so were you successful?

  2. 0

    User beware. Never changes.

  3. 0

    Old Geezer, great question to ask. I’ll share a little personal experience with you. I have made substantial profits from properties. On the other hand with my experience with shares, I has been blamed by a family member for losing a million dollars of our family’s fortune. Yes I am not successful in shares, but I consider myself as being more educated in shares then in property.

    So in my personal opinion, experience counts more (regardless of outcome) than whether you have achieved past “success”. Success in the worldly definition anyway..

    • 0

      Like OG I believe theory and education are one thing but unless some one has actually put that knowledge into practice and has proof it works then how do they know it works? I have a friend who is a qualified financial planner but they employ others to invest their money and whinge about poor returns.

      Like you I have done well out of properties but they are a pain to manage with not onky tenant problems but agents can be a real hassle as well. Shares on the other hand is where the majority of my wealth has been and still is being generated. All I need anywhere in the world is access to the internet and a tablet as it is more readable than a smartphone for a person my age.

      I know many financial planners and go to seminars that interest me. However one has to have enough financial knowledge to work out what will work and what is pie in the sky stuff. I remember about 10 years ago telling a planner that property in Sydney would be a great investment only to be laughed at. So I sold my units in Brisbane and bought in Sydney. I have since sold out of Sydney. OK I don’t like the return I’m now getting on that cash at the moment but feel it is not the time to increase my holdings in other markets.

  4. 0

    If you are at the point of retirement make sure that you find an independent financial planner and there are not many of them around, but they should take no fees or commissions of any kind for any products they recommend. Anyone else is NOT independent and you may as well put your money into the casino or on horses – an exaggeration, but the casino is a close analogy to the share market. Remember that the world is currently at the lowest point in decades of the interest rate cycle which is unsustainable and will reverse in time. With inflation in the toilet the main concern is to maintain your nest egg until safe investments can be made that will avoid you being fleeced by these parasites until you die. The superannuation system has now been hollowed out to the point where you are better to take it out and invest in five year term deposits until the global monetary system sorts itself out.



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