Tips for finding the right financial planner

Tips for finding the right financial planner

Paul Giordano

How financial planners help

The reason people look for a financial planner is for advice on areas where they do not have either the confidence, the knowledge or the know how to make decisions.

We seek assistance and advice from financial planners on how best to plan for our financial future on a large scale, or focus on one specific financial goal such as saving for a home deposit, or creating an effective sup­­­­erannuation structure. In general they advise on how best to grow and protect your wealth through saving and investment strategies combined with risk protection and estate planning strategies.

As the industry has grown, some financial planners have become more specialised in the advice they give and the clients they cater for. Some may focus on retirement planning whilst others may focus on early stage investing.

Financial planning has had a rocky road with some very well publicised misadventures by planners who took advantage of their clients and patently did not act in their best interests. The industry has made major changes to ensure that financial planners are well educated and better equipped to provide clients with the right advice.

You are in well qualified hands

It is a long and arduous road to acquire the skills and knowledge to become a good financial planner. After qualifying every financial planner still needs to complete at least 40 hours of continuing professional development every year.

The rules are changing and the industry has recently increased its education standards so that it will become mandatory for anyone seeking to become a financial planner is degree qualified and has also passed the necessary financial planning specific accreditations post attaining the degree. Existing financial planners who do not hold a degree will also have some further education or examination requirements placed on them. Additionally, there are further qualifications financial planners can undertake to either specialise in a specific field or to attain a higher level of education within financial planning. Currently the highest industry specific qualification that can be earned is a CFP® or Certified Financial Planner. All financial planners are also required to maintain minimum levels of ongoing education each year the minimum level for a CFP is 40 hours.

How to find the right financial planner for you

First and foremost you should be comfortable with your financial planner. You will be revealing some very sensitive financial information and you will hopefully have a long relationship based on mutual respect and trust.

Ask a lot of questions.

  • How long have they been a practising financial planner?
  • How many clients do they have?
  • Do they have any clients that have similar circumstances to you?
  • What qualifications do they have?
  • Do they have access to other services?
  • Do they have adequate support staff?
  • Do they have testimonials from current clients?
  • How do they charge?

Ask any question that will give you a level of comfort to ensure you are happy dealing with them. 

How do they charge?

This can vary from planner to planner. There is no right way, however there are certainly some conflicted structures which you should steer clear of. What you should look for is someone that has your best interests at heart, someone that is working for you and is not being rewarded by someone else.

Generally, you can break the fees down into three main components; strategic and investment advice (which may include implementation), personal risk insurance advice and ongoing advice/portfolio/insurance management.

Most professional financial planners will charge you an hourly or flat rate for the strategic and investment advice they provide you, it is now commonly agreed that commissions paid by investment product placements is conflicted. Insurance advice may be billed by the hour for the strategy but it is still common for insurance product providers to pay the adviser for placement of the insurance products. With regards to the ongoing management of your advice and investment portfolio most advisers will charge an ongoing flat fee, a fee based on the assets they manage for you or a combination of both. Insurance product providers will generally pay the adviser an ongoing fee or “trail” for the personal insurance policies you hold.

Whatever planner you decide to go with, ensure that you have a clear understanding of what and how they will charge you, and if they receive any commissions from third parties. You are looking for an adviser who can step back and give you the correct advice based on your situation.

Do you even need a financial planner?

Financial planners fill a professional void similar to lawyers and accountants. If you put your mind to it you may well be able to do your own taxes, or represent yourself in court, but you may not have the experience to ensure you are taking full advantage of all the avenues to build your wealth.

Having a clear understanding of personal financial matters can require a great deal of work requiring many hours of learning and research, for most it is not worth the effort. You could probably tune your own car but is it worth the effort?

The older you get the more complicated your affairs will become. As your wealth grows, so does the complexity of managing it, and understanding the laws that apply to it. Good financial planners will be organised and ensure you stay on track. They will be able to respond to legislative changes that may affect your investments.

Ask friends

Like so many other things, asking your peers for advice can be a good place to start. Recommendations can go a long way but still create a checklist and follow it. Ensure that you don’t follow a recommendation just for the sake of it, double check credentials, meet them face to face and come to your own conclusion.

Test their suggestions

When your new (or soon to be) financial planner creates a strategy with suggestions, test them. Do a bit of homework yourself and see if it stacks up.

Taking on a financial planner is not handing over all your personal finances, you should still be in control and have a very clear idea of what you are doing.

First date

The easiest analogy might be that of a first date. Get to know each other, ask all the right questions and make sure you are comfortable with each other. If all goes well you should have a very long and mutually satisfying relationship with your new financial planner.


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