Working with a financial adviser

Financial advisers are professionals who can help you plan and manage bigger financial decisions. Know what to expect when you get advice and how to stay on top of your financial plan.

Helping you set and achieve your goals

A financial adviser can help you set financial goals so you feel confident that your future plans are achievable. If you’re not on track to achieving your goals, an adviser can help you put the right strategies in place, or set more realistic goals.

Financial advice can be useful at turning points in your life, like when you’re starting a family, being retrenched, planning for retirement or managing an inheritance.

When you meet with an adviser for the first time, it’s important to work out what you want to get from the advice. An adviser should take the time to discuss what’s important to you and ask about your short and long term goals before they make any recommendations.

Prepare to see an adviser

Giving an adviser accurate information about your situation allows them to tailor the advice to best meet your needs.

An adviser will need information about your:

• personal situation, such as your age, where you work and whether you’re in a relationship

• assets, such as your home, savings, super, car, shares and other investments

• debts, including mortgages, loans and credit card debt

• income from all sources, including pay, investments and government benefits

• expenses (every week or month) — our budget planner can help you make a list

• insurance policies and how much you’re insured for

• estate plans, such as a will or power of attorney

• lawyer and accountant

Know what your adviser is offering

At the first meeting make sure you discuss:

• the scope of the advice (what is and isn’t included)

• the cost and your options for paying

• what information they’ll give you and how often

• when they’ll consult you and when they’ll need your permission

• the level of authority you’re giving them to manage your investments and to access your money

• how often you’ll meet to review your financial plan’s progress

An adviser will also ask you to complete a questionnaire to work out how much risk you’re prepared to accept to reach your goals. This will help them recommend suitable investments for you.

Check your financial plan

Once you’ve agreed to go ahead, your financial adviser will prepare a financial plan for you. This is given to you at another meeting in a document called a Statement of Advice (SOA)

Ask the adviser to explain anything you don’t understand. You should always feel comfortable with your adviser and their advice.

Check that your Statement of Advice:

• addresses your financial goals and personal situation

• lists accurate financial details, such as your assets, debts, income and expenses

• has a level of risk you’re comfortable with

• explains what the advice covers (and doesn’t cover)

• explains how the recommended strategy fits your financial goals, risk profile, time frame, and financial situation

• explains how investments will be managed — for example, through an investment platform 

• details how any recommended products fit into the plan

• explains the pros and cons of switching to another financial product (for example, another super fund)

• clearly shows all the fees you’ll pay, how they’re paid, and who they’re paid to

Know what’s happening with your money

Cash management account

If you set up a cash management account to manage your investments, decide how much access to give your adviser. The access you give your adviser could be:

• view access – your adviser can see the account transactions but cannot operate the account

• withdrawal access – your adviser can make transactions, including withdrawals

• complete access – your adviser can do all the things you can do with the account, including changing contact details, changing or adding authorised signatories or closing the account.

Giving your adviser access to your account places a lot of trust in them. Insist that you are notified of all transactions, and that you receive all correspondence related to the account.

Managed discretionary account

Your adviser may suggest a managed discretionary account (MDA) as a way of managing your investments. This involves signing an agreement (MDA contract) so they can buy or sell investments without having to check with you. Together, you agree on an investment program and your adviser must make investment decisions in line with this.

Before you invest in an MDA, compare the benefits to the costs and risks.

Protect your money

To protect your money:

• Don’t give your adviser power of attorney.

• Never sign a blank document.

• Put a time limit on any authority you give to buy and sell investments on your behalf.

• Insist all correspondence about your investments are sent to you, not just your adviser

• Keep all your paperwork and electronic files in one place. For more tips, see keep track of your investments.

• For investments, write cheques or transfers payable to the product provider (not your adviser).

• Regularly check transactions if you have an investment account or use an investment platform 

Review the advice

If you’re paying an ongoing advice fee, your adviser should review your financial situation and meet with you at least once a year.

At this meeting, make sure you discuss:

• any changes to your goals, situation or finances (including changes to your income, expenses or assets)

• whether the level of risk you’re comfortable with has changed

• whether your current personal insurance cover is right

• how you’re tracking against your goals

• whether any changes to laws or financial products could affect you

• whether you’ve received everything they promised in your agreement with them

• whether you need any adjustments to your plan

Ending an agreement with an adviser

If you decide that you no longer want ongoing financial advice, find out if there are selling and buying costs or any tax or government assistance implications.

Details about how to end your relationship with your adviser should be in your SOA. If you’re moving to a new adviser, you’ll need to arrange to transfer your financial records to them.

Please contact us on 02 9150 9555 if you seek further assistance on this topic.

Source : Moneysmart .gov.au November 2020

Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/financial-advice/working-with-a-financial-adviser

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