How to choose an Adviser

Selecting a financial adviser can be challenging. The industry is crowded, and the array of choices large, so how do you choose who to consult for advice?

When selecting an adviser, you should consider professional qualifications and memberships, relationship potential, an agreed and transparent fee structure; and that all recommendations are given in writing.

Professional qualifications and memberships

Your adviser should be able to show you the following:

• Certified qualifications in the financial topic on which you are about to seek advice. Such qualifications include Diploma of Financial Planning (DFP) and Certified Financial Planner (CFP)TM;
• Membership of either the Financial Planning Association of Australia (FPA) or the Association of Financial Advisers (AFA). These national bodies enforce a strict code of conduct upon their members and have the authority to investigate complaints and discipline members if required; and
• Evidence they are an authorised representative of a financial services dealer group (like Consultum). The dealer group must be an Australian Financial Services Licence (AFSL) holder through the Australian Securities and Investments Commission (ASIC). This ensures they are legally registered to support their advisers (called Authorised Representatives) in the provision of financial advice to you. Alternatively, the adviser may hold their own AFSL.

Relationship potential

While it is difficult to quantify, the personality and work method of an adviser is fundamental to your decision. You must be able to trust your adviser and feel comfortable sharing personal information about your financial affairs. Put simply, you need to get along.

Remember that convenience is also a consideration, so try to choose an adviser who works near your workplace or home.

In many cases, your first meeting with an adviser will be complimentary. This is a great opportunity for you to meet your potential adviser face-to-face and decide if you could work with them.

Agreed fee structure

Agree on a fee structure for the payment of the advice you seek before you commit to having a financial plan developed or to receive the advice. You don't want to get through the entire process without knowing exactly what the service will cost you.

The adviser should be up-front and transparent about how they will be remunerated.

There are three ways that you may pay for services provided. You should discuss these options with your adviser and agree on an option that best suits you.

The options are as follows:

Option 1 - Pay fees out of the product in which you invest

The product provider may pay the adviser commission out of:

• A contribution fee, which will be deducted by the product provider from your initial investment amount when you proceed with a transaction;
• management costs (annual administration fee), which will be deducted by the product provider from your account on an ongoing basis (e.g. monthly, quarterly or annually), and/or;
• an adviser service fee that you may agree to with your adviser for ongoing advice and service in relation to your investment in certain products.

In relation to risk insurance products, the product provider may pay commission to the adviser out of the premiums paid to it.

Option 2 - Agreed fee

You may agree to a fee, based on either the time spent preparing your Statement of Advice or on the value of the funds invested. If this option is agreed, the adviser will invoice you for the fee when providing their written recommendations.

Option 3 - Combination of the two

You may agree to pay for the service by means of a combination of the above two options.

The important point is to agree on the fee structure that best suits you before you engage the services of a financial adviser.

All recommendations given in writing

Prior to committing to a financial plan, the financial adviser should clearly outline - in writing - the strategy they propose.

They are also required to provide you with a copy of their Financial Services Guide. This guide details how the adviser:

• will be remunerated;
• the services that will be provided; and
• procedures for complaint resolution (should they be required).

Next step – The value of financial advice

Make an appointment with a Consultum financial adviser today or call
1800 062 134.

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