In New Zealand, financial advisors don’t need any special qualifications and don’t need to be licensed (unless they are share brokers). Many advisors sell only a limited range of products, so they may not suggest other kinds of investments that could suit you. Most advisors are also paid on commission. Some products carry bigger commissions than others – meaning advisors may have a vested interest in recommending one product over another.
So before you trust your money to a financial advisor it’s important to find out about their qualifications, any limits on what they sell, and how much they will make if you follow their advice.
Sorted’s advice checklist will help you get this information, along with answer to other important questions.
Print out the checklist and take it with you when you first meet with an advisor. Don’t feel embarrassed about asking these questions. Good advisors will be used to supplying this information and may even provide it without being asked. If the advisor can’t answer the questions on the spot, leave a copy of the checklist and ask them to get back to you with the answers.
The checklist covers things like:
- Is the advisor a member of a professional organisation?
- Their experience and qualifications
- What’s in it for the advisor? What fees or remuneration will they receive? Do they offer an 'hourly rate' fee option (rather than commissions) and how much might that be in your case?
- What products do they give advice about? What products can’t they advise you about?
- Information advisors must provide by law, such as whether they’ve ever been made bankrupt, and how they will handle your money.
Ask the advisor to give all this information in writing and keep it somewhere safe. There are no guarantees of good financial advice. But getting answers to the questions in this checklist will help you find an advisor who can help you get sorted.
Find out more... There are lots of other ways Sorted can help you manage your money.
Click for information about:
Help with investing, including getting good financial advice and how advisers get paid:
http://www.sorted.org.nz/investing/
