What is a financial planner?
A financial planner is a qualified professional who helps people meet their long-term financial objectives. They achieve this by analysing the person’s current financial status (including assets, debts and insurances) and creating a plan for them to follow in order to realise their financial goals.
Where can I find a financial planner?
There are several ways to find a financial planner, including:
- Obtaining a word of mouth recommendation from friends, family or work colleagues
- Find a planner online
Reviewing a financial planner: Five things to check
If a business provides financial advice, they must hold an AFS licence which is issued and regulated by ASIC. Any financial planner whose services you are considering hiring should have a licence and be on ASIC’s financial advisers register.
If they do not have a licence, don’t use them as they are operating illegally and you will have no legal recourse if the advice they give you is incorrect or misleading.
You should also make sure they are licensed to provide advice on the products you are interested in (i.e. superannuation, insurance etc) and are not restricted to only giving advice on an approved product list.
A financial planner should also have a Financial Services Guide (FSG), which you can usually find on their website or obtain from their offices. Among other things, this tells you the services they offer, their fees, their licence number and any affiliations with other companies they might have.
Basically, the more qualified a potential financial planner is, the better your chances of getting the right advice. Look for one who has a diploma (at the very least) or ideally a degree in a relevant discipline such as finance or accounting.
They should also be up to date with the latest industry regulations, so as well as having the piece of paper, make sure they are undertaking regular training activities through reputable organisations to ensure their ongoing professional development.
Of course, someone can be highly qualified but because they’re fresh out of university, have little or no industry experience. So ideally you should try and find a financial planner who has both qualifications and a number of years’ experience under their belt.
Before you agree to be advised by someone and sign any paperwork to that effect, make sure you find out how much their advice will cost you. They should outline their fees upfront and whether they include any service or administration fees and any fees for ongoing reviews of your financial situation. If they do, you should expect to have reasonable access to them when you have questions or wish to discuss a financial issue with them.
What are some things to think about before speaking to a financial planner?
It's a good idea to come armed with the following information:
- What you own. Think of your house, any savings accounts you hold, shares, crypto-currencies and any other investments.
- What you own. Think of your mortgage, credit card balance and any other loans.
- How much you earn. Look at any income from your regular job as well as any dividends from your investments.
- Your regular expenses. How much do you spend per week on living expenses?
- Insurance that you have and insurance that you need. For instance, you might already have health insurance but don't have life insurance.
- The status of your will. Check to see if it's up to date
General outline of what occurs when you meet a financial planner
When you find a financial planner who seems to tick all the right boxes, your meeting with them should go something like this:
- They present their credentials. This should include their Financial Services Guide (FSG) and a Statement of Advice (SOA), which outlines their commission or remuneration.
- The fact-finding stage. This involves discussing your current financial position and your goals for the future. You should take copies of all relevant documentation with you, including financial statements and details of loans and other debts.
- The recommended strategy. The planner will then outline the steps you will need to take to reach your financial goals (this may be at your second meeting after they have deliberated more on the matter). According to ASIC law, this must be in the form of a Statement of Advice (SOA).
- Discussion of recommendations. This may also be at a second meeting, after you have had time to consider their advice and this is the time to ask lots of questions about anything you aren’t clear on or have doubts about.
- Signing the paperwork. If you decide to go ahead with their plan, you will need to sign all relevant paperwork including any forms involved in the strategy such as insurance or loan applications and super rollover requests.