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The Royal Commission into misconduct in the banking, superannuation and financial services industry revealed unscrupulous behaviour that has impacted many unsuspecting customers.

To avoid this situation, some financial planners have deliberately chosen a path that enables them to always put their clients’ interests first and not be impeded by the requirements and constraints of the Australian Financial Services Licensee (AFSL), through which they are licensed. These dedicated financial planners provide the expertise needed to create wealth and professionally manage portfolios. They build long-term and highly valued relationships with their clients.
THESE SIX QUESTIONS WILL HELP YOU FIND THEM:
Who is the AFSL?
Financial planners are licensed through an Australian Financial Services Licensee (AFSL). Find out who the licensee (AFSL) is, who owns the AFSL, what associations they have and whether they own or promote a product. If so, you are at risk of receiving conflicted advice.
How much are you paying and how much are others making?
Professional financial planners have business overheads and many regulatory requirements. As expected, there will be fees payable by you to receive advice and service. To help evaluate if you’re getting value, understand how the fees and costs work and what you are paying for. To help determine if you are receiving conflicted advice, find out how much all other parties will receive.
Is the financial planner suitably experienced and qualified for your situation?
With experience comes wisdom, a deeper understanding of how best to avoid pitfalls and manage the risks associated with investing. This is particularly important if you are nearing retirement, or have retired when having personalised, risk-focused management of your capital is paramount. One way of achieving this is through an Individually Managed Account (IMA) which enables the maximum control and transparency. These personally customised portfolios can be reviewed as frequently as weekly.
What research is supporting the investment strategies and recommendations?
Unbiased comprehensive research is essential to provide unbiased specialist investment advice. What research resources does the financial planner use and how independent is it?
Will the adviser help you understand how much risk you need to take?
If low-risk smart strategies are suffice for you to achieve your goals, why consider higher risk strategies? Borrowing is a two edged sword; it magnifies gains AND losses. Diversification and liquidity help manage the risks. Factor in ALL associated costs such as life insurance.
Am I making a sound financial decision?
Be wary of the ‘Fear Of Missing Out’ (FOMO) tactic often used by firms that are pushing a product. The HERD Instinct is another trap. We often experience a sense of comfort when acting collectively. Be cognisant of which herd you are hanging out with and be prepared to think independently.

This article was published in Matters Magazine  – 24th May 2018

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