Questions to ask your Financial Adviser Currently the way the law stands in New Zealand a person could be a 'street sweeper' one day and the next day hold themselves out to be a financial adviser/planner. This is why you should be very careful when seeking advice. 1. Do you receive independent investment, insurance and economic research?
Independent research should be an important facet in the offering of financial advice. Internationally, independent research is compulsory, this is not the case in New Zealand. Do they follow an approved asset allocation model and do they document deviations from this procedure. 2. How experienced and qualified is the adviser?
You have the right to request from any investment adviser a written disclosure statement stating his, or her experience and qualifications to give advice. We recommend you ask for the full comprehensive disclosure. That document will tell you; - Whether the adviser gives advice only about particular types of investments; and
- Whether the advice is limited to the investments offered by one or more particular financial organisations; and
- Whether the adviser will receive a commission or other benefit from advising you.
- The maximum brokerages, commissions and trail commissions that could be received.
You are strongly encouraged to request that statement. An investment adviser commits an offence if he or she does not provide you with a written disclosure statement within 5 working days of request. You must make the request at the time the advice is given or within 1 month of receiving the advice. In addition - - If an investment adviser has any conviction for dishonesty, or been adjudged bankrupt, he or she must tell you this in writing; and
- If an investment adviser receives any money or assets on your behalf, he or she must tell you in writing the methods employed for this purpose.
Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes.
Refer to Which Adviser to use? 3. What organisations do they belong to?
Do they belong to industry recognised organisations such as the Institute of Financial Advisers (IFA). A requirement for continuing to belong to an organisation such as this is continuing education requirements, complying with their code of ethics and professional conduct. 4. Are their practices and procedures independently audited?
Don't just go on the adviser's say so. Can they show that their advice is independently audited against "industry best practice standards". 5. What range of Services can the adviser cover?
Do they follow the six step financial planning process? Do they give comprehensive advice covering investments, insurance, retirement, asset protection and estate planning, and taxation advice. 6. Will advice be documented?
All advice should be in writing. 7. What happens to my money?
Your money should go directly from your bank account to the bank, financial institution, or fund manager you are saving or investing with. If an adviser tells you that your money needs to be paid to him/her, or their company, ask why. There should be few cases where an independent financial adviser needs to take custody of your money. 8. Do they have an on-going client care program?
How will you get, and how often will you get, on-going advice after your initial investment? Can you view your investment portfolio from their web site? 9. Do they have a succession plan in place?
What happens if your adviser moves on, leaves the industry? 10. Do they readily make available client testimonials?
How do you know they are good? Ask for client testimonials, do they hesitate or welcome your question? 11. Are they prepared to guarantee their service?
Also check out :
- one of our fortnightly articles entitled "Which Adviser?"
- NZ Financial Planner of the Year 2002, 2003 Finalist
- Our Advisers
- Our Quality of Advice Guarantee
- Client Testimonials
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