Working with your Financial Adviser

In your first meeting or meetings with an adviser, you’ll need to provide detailed information so that the adviser can give you good recommendations.

It’s up to you to decide whether you want one-off advice or on going service.

Think About Your Situation

Do some advance thinking about what you want to achieve and what your priorities are. The more preparation you do, the better the advice you’re likely to get.

Take a close look at your financial situation (where relevant to the advice you’re seeking). For example, if you want a full financial plan on a range of issues you could start by working out:

  • What you own – assets including your home, superannuation, car, shares or other investments and personal property
  • Who owns what – for example, are assets owned personally, jointly or in family trusts
  • What you owe – debts including mortgages, loans and outstanding credit card balances
  • Income and expenses – the Sorted website has budget calculators that can help
  • What insurance you have and how much cover.

If you’re looking for specific advice on only one issue, you will only need to prepare information relevant to that issue.

Set Goals

Ask yourself:

  • What are my priorities and goals in the short, medium and long-term?
  • What do I need to achieve financially to reach my goals?
  • Who depends on me financially and what do I want to provide for them?

The Sorted website can help you set goals and work out your investment profile.

Provide relevant and full information

Give your adviser accurate information. Sometimes your adviser will need very detailed information, especially when giving retirement planning advice. This is because they’ll have to consider tax and government retirement entitlements as well as your retirement needs. Your adviser should tell you what information to bring to the meeting such as savings account statements, superannuation account statements and pay slips.

If you are not completely honest with your adviser or don’t disclose something you don’t see as relevant, you could get the wrong advice. Tell your adviser if you can only give limited or incomplete information. They need to know if they have only part of the picture.

If you’re only looking for general advice (‘class’ advice), your adviser should only ask you for basic information to determine which general group of customers you belong to. You will not need to give full information about yourself if you are only getting general advice.

Discuss Risk

The first or second meeting is a good opportunity for you and the adviser to have a discussion about investment risk. This is sometimes called risk profiling and helps the adviser understand how much investment risk you are willing to accept. Based on the information you provide, the adviser will need to recommend what type of investment is suitable for you based on your risk profile. For more information, see risks involved in investing.

Consider the advice

At the end of your first meeting (sometimes it will take a couple of meetings to explore different options), your adviser may go away, do some further research and put together some recommendations. Your adviser must talk you through any recommendations and clearly answer your questions.

If you are receiving personalised investment advice, your adviser must put any recommendations to you in writing and talk them through with you as well.

Your adviser will also give you a disclosure statement. This should be in two parts. The first part will give you information about the adviser, the services they provide and how they are paid. The second part will provide specific detail such as the costs of the services they are recommending, and specific details on how they will be paid for those services and any conflicts they may have.

Read the Paperwork

Take your documents home to read before you agree to anything. Be prepared to set some time aside to go through the advice carefully. It might help to review the advice in stages, beginning with the overall strategy and then moving on to the detail.

Ask Questions

Don’t be shy about asking questions. Advisers are required to put your interests first and explain the options clearly. Remember that it’s your money and your future. The adviser has only made recommendations that you can accept, reject or ask to be varied. Ultimately, the decision rests with you. See making informed choices.

Moving Your Investments and/or Insurance

Sometimes your adviser may recommend switching existing investments or insurances. If so, make sure you understand the reasons and the benefits, and any disadvantages to you. Ask how many different products your adviser sells and who makes those products. Ask your adviser whether they have compared products made by different product providers. Find out any costs involved in making the switch.

Your adviser may suggest moving your current investments to their preferred administrative platform (a master trust or wrap service). Again, check you will benefit from making this change and whether there are fees for making the switch and how the on-going fees compare to your current arrangements.

When You Will Need On-going Advice

If you don’t have a lot of time or adequate expertise, or if you don’t feel confident managing your own investments, getting on-going support from an adviser can be a good idea.

Review Your Plans Every Year

Review your plan at least once a year to ensure it is still right for you. You may be able to check this yourself. If you want advice, check how much your adviser will charge to do this review for you and what the fee includes. Then you can make an informed decision about whether you want to initiate any reviews or if you’re happy to leave it up to the adviser to decide on the frequency of on-going reviews.

When Things Change

Between reviews, keep an eye on whether there are major changes in your circumstances, the market or your investments. There can also be changes to laws that affect superannuation or other entitlements. If you’re not sure what these changes mean or whether they will affect you, you can talk it over with your adviser. If you agree to on-going support from your adviser, they should be able to keep you up to date and contact you when changes need to be made.

Saying No to On-going Advice

Your financial affairs might be quite simple. In retirement, you may feel comfortable managing your own investments most of the time. If you have enough time and know-how, you may not need to pay an adviser for on-going service.

It’s up to you whether you want or need on-going service from your adviser.

Many advisers are happy to charge a fee for advice and give back to you any on-going commissions they might earn from investment products you purchase. You still have the option of getting advice in the future if your circumstances change.