Choosing the right financial advisor

Key points

• Financial advisors are required by law to act in your best interests
• There are lots of advisors out there to choose from
• Considering the costs, qualifications and personal attributes can help you find the right professional to help you

All financial advisors are required by law to give you the best advice for your individual situation when you meet with them, but there are some financial planners which may suit you better than others depending on your personal financial situation, goals and the areas which you want to focus on.

The first step in the process of choosing a financial planner is to think about what your goals might be and what kind of lifestyle you might want to live in retirement, as well as where you might want to live and what supports you might need in the future.

Once you’ve got enough of an idea about your goals that you can discuss them with a financial advisor, then think about the points below.

Specialisation

While all financial advisors are experts in finance, not all of them are experts in retirement planning or aged care costs.

It’s important to make sure that the financial planner you choose understands your goals for the future, fully understands your current financial situation and is qualified to give you the right advice.

Financial planners need to have a Financial Adviser Standards and Ethics Authority (FASEA) approved bachelor degree or equivalent qualification and pass the FASEA national exam.

Financial advisors’ qualifications can be viewed on the Federal Government’s MoneySmart website.

There are also some questions you can ask to gauge whether a financial planner will be able to meet your needs:

• What licenses, credentials or other certifications do they have?
• Do they specialise in dealing with retirement planning/aged care financial issues?
• What experience do they have in retirement/aged care finance?
• Will they provide you with some sample plans?
• How much do they charge and how much does this depend on your situation?
• Will they provide you with an outline of all your options?
• Will they provide their advice in ‘plain English’?
• Will their advice be in writing so that you can take home any strategies they give you to follow?
• Will they deal with the Department of Veterans’ Affairs or Centrelink on your behalf?
• Is the service a once-off or an ongoing service and does this change at all if your circumstances change?

Finding a financial advisor who has the experience and qualifications to provide the exact service you need is a major part of setting yourself up for success with retirement planning and to achieve your financial goals.

Financial factors

Another important factor to consider when choosing a financial advisor is they fees they charge for their services, as these will differ between providers and it can be helpful to get several quotes from providers in your area.

If you are looking for more of an intermittent service, the fee is likely to be different than if you want to see your financial advisor on a regular basis. Some providers may only offer regular appointments, so if you want to only have contact with the financial advisor when your circumstances change or you need a little extra help, then you will need to look for a provider which offers once off services.

The fee may also be higher if you have a complex financial situation which will take more time and effort to sort out, as well as more sessions to ensure you have the right financial strategies in place.

Community feedback

Your friends, family or other members of the community may be able to recommend a good financial advisor, so starting with the professionals who are recommended by word of mouth can be helpful. But remember, each person’s situation is different so a recommended financial advisor may still not have the experience that you need personally.

If you have several advisors which you are considering, talk to as many people as you can who have dealt with each before, and ask to meet the advisor to see what they are like before locking into one option.

Community trust can boost your confidence in a financial advisor, as can meeting them, and it is a vital part of the process to be able to trust the suggestions for financial decisions which the planner is making.

Personal attributes

Some characteristics help to foster trust in a financial advisor and give you the idea that they both understand what you want to do and know the best way to achieve your goals.

Personal attributes which you might like to base your choice of provider on include:

• A balanced and impartial nature
• Considered and measured decision making, as opposed to emotional or impulsive decision making
• The ability to explain complex terms or strategies simply so that you understand
• Showing interest and engagement when you are talking, including asking questions of you to make sure they understand everything you are saying and your goals
• Punctuality and giving you the time you need, rather than rushing meetings
• Confidence in the advice they give to you
• Flexibility and adaptability to be able to change advice and strategies when your circumstances change

A financial planner doesn’t necessarily have to have all of these attributes, but this list might just help you with who to choose if you have lots of options.

Of course, as you will likely be seeing a professional at their office, the number of financial planners you can choose from will depend on how many you can conveniently access within your local area.

Disclaimer: The information on this site is general in nature and does not constitute legal or financial advice. Readers should seek their own personal legal and financial advice from a suitably qualified practitioner.

Has a financial advisor helped you with retirement planning? Tell us about your experience in the comments below.

Related content:
How do financial advisors help with retirement planning?
What a financial advisor can do for you
Important questions to ask your financial advisor
What is the best way to find a good financial planner?