All advisers have a legal responsibility to act with care, diligence and skill and not act in a way that is misleading, deceptive or confusing.
They can save you time, and help you achieve your financial goals. But remember, it’s your money so you need to ask the right questions before you make any decisions.
Below are some ideas of information to find out when you meet your adviser.
|TIP: It’s important you’re confident the advice you’ll get will be right for you. Speak to several financial advisers before making a decision about which one to use.|
Can you only receive general advice or will it take into account your particular financial situation and goals? Also, can your adviser recommend any products on the market or only the ones their organisation sells?
A bigger range of products means more choice for you. If your adviser only offers a limited range, ask them why. Also find out if they can still offer advice on products you currently have.
Many authorised financial advisers (AFAs) have the National Certificate in Financial Services (Financial Advice). (This is now known as the New Zealand Certificate in Financial Services.) They’re also required to undertake continuous development to maintain their professional competence, and to gain new knowledge and skills.
AFAs who do not have their certificate must have an alternative qualification, such as a graduate diploma in business studies (endorsed in financial planning). For a full list of alternative qualifications and designations, see the code of professional conduct for AFAs.
Registered financial advisers (RFAs), such as insurance and mortgage advisers, don’t have to have a formal qualification. You can ask them whether they have any relevant qualification, for example, the Chartered Life Underwriter (CLU) designation.
|TIP: If an adviser suggests changes to your current financial products, make sure they explain the risks and benefits of doing this – or tell you if they can’t so you can investigate yourself.|
AFAs are regulated by us. They must abide by a code of professional conduct which sets out minimum levels of competence, knowledge and skills, ethical behaviour and client care. It also outlines what continuous training is required.
QFE Advisers don’t have to follow the Code but the organisations they work for have systems and procedures in place to ensure they closely follow a set of professional standards. We oversee how QFEs manage their advisers.
Registered Financial Advisers (RFAs) are not required to follow the Code of Professional Conduct but they may belong to a professional association that has its own mandatory code of conduct.
Find out if your adviser has experience helping other individuals with similar goals to you. For example, are the adviser’s other clients planning for retirement or are they young families wanting to save for their children’s education? You can ask to see another client’s portfolio reports as an example of how they have helped someone in a similar situation. All personal information will be removed from these reports.
If your adviser is providing ongoing advice, you should receive regular reports and have regular catch-up reviews. Ask your adviser how often these will be and what other information you’ll receive. It’s important to have this information so you can track your investments.
Some advisers charge a fee for service. Others charge a commission or may receive sales related incentives.
For more details about how advisers charge their fees and any commissions they may receive for selling you products, see paying for advice.
Ask if there will be any ongoing trail commission or charges for closing your investment portfolio.
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