Questions to ask your financial planner

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Sixty per cent of YourLifeChoices members have visited a financial professional to discuss or plan their retirement, according to the most recent YourLifeChoices Insights research (6665 responses to 45 questions).

Of those who had seen an adviser, 34 per cent found the visit ‘very helpful’ and 37 per cent found it ‘helpful’. This 71 per cent positive result underscores the value of financial planning both in and for retirement.

But how do you choose the right financial planner for your particular situation? And how do you evaluate their suitability for your needs both today and in the future?

Here are 11 tough questions to ask before you commit.

1.      Are you licensed to give financial advice? If not, who holds the Australian Financial Services Licence (AFSL) under which you operate?
It is really important to know the actual ownership of your adviser’s business. Is it the adviser’s? Or is he or she part of a larger organisation – a group of planners, a bank, a superannuation fund, or a stockbroking company? Because if they are, then their advice may be influenced by their employer. This is something you should know and discuss up front.

2.      What qualifications or experience do you have?
You haven’t worked and saved for 40 years to trust your hard-earned savings to someone who is not fully competent and qualified. ASIC suggests that the minimum qualification may not be enough, so requesting evidence of further training in the form of a diploma or a degree is not unreasonable. But why not go further and ask if they have a satisfied customer who can recommend their services? Most of us do this with plumbers and electricians when there is far less money at stake.

3.      What fees do you charge? Are any commissions involved?
There can be many different fees attached to financial advice. These include, but are not restricted to, super fund fees, fees for advice, fees for funds under administration, and fees/commissions on insurance. ASIC shows how these can add up to $8000 in the first 12 months in the case of ‘Edward’.

4.      Can you give advice on taxation?
Much of the management of retirement income savings and drawings is related to rules about superannuation and tax. There is a lot to be saved, or lost, by managing your savings in the most tax-effective way. Be sure that your adviser is fully aware of this detail, if you want to ensure you receive all your entitlements.

5.      What information will be held on my file, and what do you do with this information? Is my privacy protected? And if so, how?
This question relates to your peace of mind. It is extremely important to understand how your personal financial information will be stored and who is able to access it. You may also wish to ensure that your contact details are not shared with other departments of a large bank or superannuation fund in order to upsell other financial products.

6.      May I have a copy of your Financial Services Guide (FSG)?
This document should be made available at your first meeting and cover most of the above information. But it should not be handed over in lieu of answering these questions. If the adviser does not know the answers without referring to this document then it casts doubt on their basic understanding of their role and obligations.

7.      What do you believe I can reasonably expect from this meeting?
The point of the meeting is for the adviser (after being fully informed of your life/money goals) to assess whether they can add value to your financial situation by helping you understand all the rules, and to use them to maximise the return on your money. So if the conversation is not about you, you and you, then they have gone off track. If the dialogue is automatically about products and returns, they clearly have not taken the time to understand your particular situation and needs. A brave and honest adviser may even say they cannot help you.

8.      After this meeting, if I accept your advice/recommendations, how often do you expect we will need to meet? And what is the fee structure for such regular meetings?
Beware of hefty ongoing fees for minimal reviews. If your adviser suggests an annual retirement ‘health check’, then that is probably a reasonable plan – but how much work will they put into that review and meeting and does this seem a fair spend?

9.      Are you able to share strategies to assist me in living within my means?
It’s crunch time and unless you can live within your means, you can quickly overspend retirement savings or pension payments and end up outliving your money. This is a concern for 81 per cent of YourLifeChoices members, as shown in the latest issue of our Retirement Affordability Index™. So, any adviser worth their salt will show a strong interest in your ability to budget and to live within your income. If they do not ask, or have no idea how you can achieve this, they are missing a vital component of retirement income planning.

10.  Are you able to confirm that you will only recommend products which are in my (i.e. the client’s) best interests – and not an ‘in-house’ product from your financial organisation (i.e. presenting a potential conflict of interest)?
This is a requirement of all planners. Sadly, many fail in this regard, so from the outset, ask these difficult questions and have the linked article at hand. If the adviser confirms that they can do this, keep a close eye on any recommendations to change from an existing super fund to one associated with their company. Challenge the recommendation and ask to see the returns over the past 10 years for both your existing fund and the adviser’s suggested fund. It may be great advice to move – and you will be doing so with full knowledge of recent performance. If it looks like poor advice, you can easily decline.

And if the above tough but fair questions haven’t given you sufficient insight into whether this adviser is right for your retirement income needs, then here is one more which should give them the opportunity to reveal their strengths:

11.  What value do you believe you can add to my retirement savings and retirement income planning which outweighs the fees you charge?
There is no ‘right’ answer to this question, but the maths will probably be persuasive. If you have a $200,000 nest egg, and like the ‘Edward’ example above, the suggested fees in the first year are $8000, then you may wish to see well above this 4 per cent ‘take’ before embracing this new adviser’s plan.

And last, but certainly not least, look up the adviser on ASIC’s financial adviser register where you will see the type of product-related advice your potential adviser can offer.

Good luck and be sure to let us know how well these questions work for you, whether you are dealing with a financial adviser from a bank, superfund or one who is wholly independent, or an accountant or stockbroker.

Do you have tips to share on getting financial advice?

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Written by Kaye Fallick


Total Comments: 5
  1. 0

    This is a very good article and, if the information is used, should eliminate any financial advisers who have something to hide.

    • 0

      Yes. It should be the very first question asked! They have massive fees. I went into the wrong career I can see. However I don’t think I could have lived with myself charging what they do.

  2. 0

    Before retiring I wanted professional financial advice as to whether I had squirreled enough away to retire comfortably. After getting the usual to be expected non-advice from 3 funds unless I was prepared to shell out $3000, a friend suggested VicSuper (Victorian super fund set up for Vic Govt employees) as their advice to non members was only $200. They were great. Their advice came with no strings attached, with no expectation to transfer my super to them. The $200 was all that was required and they gave me all the information that the others wanted $3k for. I was so impressed I eventually transferred to them once I had retired and am happy with the performance of my low risk investment.

  3. 0

    I bless the day I found my financial planner……10 years ago, on the advice of my brother in law. He has saved me money over the years, changes some of the investments in my super, when he feels it is needed, he charges 1% fees….was a tower of strength when my husband died suddenly, organised everything….his advice was invaluable! These people ARE out there….the adage, ‘ By their fruits shall you know them'( results, I take that to be)
    He has proven trustworthy, and thoughtful…..I’m into my 11 the year with this gem of a man.



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