It can be hard to tell whether an adviser has done a good job. This often isn’t clear until years after the advice has been given. If you’re unsure, you have the right to ask another adviser for a second opinion. This will usually involve a fee.
There are certain things you should expect from all advisers, regardless of the type of advice you’re receiving. If your adviser is suggesting you change from one product to another, providing you with a written financial plan or giving you personal advice about particular investment products, you’d expect more detail.
Make sure you find out if you’re a retail or wholesale investor as this affects the level of protections you have if things go wrong.
All advisers providing personal advice should provide you with their disclosure document(s). The disclosure document(s) provide useful information about the adviser. When providing personal advice we would also expect the adviser to:
|TIP: All advisers have a legal responsibility to act with care, diligence and skill and AFAs must place your interests first and act with integrity. If you don’t feel this is happening, you’re entitled to ask why they have chosen the investments they have.|
If an adviser is providing personal advice and has suggested particular investment products, they should provide you with sufficient information in writing to enable you to make an informed decision. This could generally include:
They must also give you the specific product disclosure information for each product you are using.
We expect advisers to be able to explain everything they give you in plain English and to be happy to answer as many questions as you have.
|TIP: Unless you’ve specifically asked for advice on only one product, generally an investment adviser would recommend a portfolio of investments. These are made up of a mix of cash, bonds, property and shares. The mix should match your investor type. Find out more on Sorted’s investor kickstarter.|
Generally, you’ll be a retail investor unless you meet certain criteria, for example, you’re a family trust or you have a large sum of money. In this case you could automatically be considered a ‘wholesale investor’.
Make sure your adviser explains very clearly what a wholesale investor is and what the implications are of being a one. Wholesale investors have less protection if things go wrong. We expect advisers will only recommend you become a wholesale investor if you have significant experience in investing and investment markets.
You can opt out of being a wholesale investor if you wish.