What is a financial advisor? – What to ask


Following on from our first article where we delved into what to look for in a financial advisor, our second article in this series is all about the questions you can ask to help choose the right financial advisor for you.

Choosing the right financial advisor for you

So you’ve decided you need the help of a financial advisor. But with so many choices, how do you know which one is the right fit for you?

Looking at their website is a great place to start, where you should get an understanding of their experience and credentials, as well as a feel for how they work and what they believe.

The next step is to dig deeper. In your initial discussion with prospective financial advisors, it’s important to take the opportunity to ask as many questions as possible in order to be confident moving forward.

The eight questions to ask a financial advisor

The reputation and credibility of every financial advisor rests on every inter-action they have with you. From the outset you should expect them to be clear and upfront about any costs and risks you may encounter, as well as your potential outcomes.

When considering a financial advisor, you want to gain a clear understanding of the depth of their experience, how they work, and what they value.

Eight key questions you should ask

1. What experience do you have providing financial advice to people in my position?

This question is designed for you to learn about the advisor’s experience, their approach, and their understanding of your current financial situation, goals and future plans. You can also ask about your advisor’s qualifications and past performance, including if they hold an Australian Financial Services (AFS) licence or is an authorised representative. You can check their qualifications on the Financial Advisers Register.

2. How do you engage and communicate with clients?

It’s important that you understand how the advisor works and keeps you updated. Some professionals are sole operators, some work in teams and some have associate advisors. Ongoing relationships with advisors often last many years, and traverse through significant life events such as birth, death, marriage, divorce, illness and career transition. So, it’s in your best interests to establish a clear and candid communication style. Right from the start, state your expectations clearly and the level of service agreement you expect. 

3. What happens if you leave/resign?

There will always be change in the workplace. The reality is that your trusted professionals are likely to move on at some stage; whether through promotion, new opportunities or a change in lifestyle and direction. We know this can cause some concern, especially when you’ve built up a strong relationship with your advisor. Speak to the advisor about what happens to your file if they were to resign or leave, and know this ahead of time, so you can plan for it.

Delving into
the why

Delving into the why

4. Why did you become a financial advisor?

If you’re about to start a long-term professional relationship with an advisor, you want to know what’s really important to them. What’s their purpose and values? What motivates them? Understanding why they do what they do can help you decide if they are the right fit, and start building trust and confidence for the journey ahead.

5. What is your investment philosophy?

Choosing the right investments for clients is one of the most critical, and satisfying, parts of an advisor’s job. Different professionals have their own investment approach, or there may be a committee or advisory group making decisions. Ask the professional how they keep up with the latest products and trends; how the advice is considered from every angle, and how is their strategy customised for your personal situation.

6. What is the difference between upfront and ongoing advice

Financial advice fees vary depending on the financial advisor and the type of advice you want. Once you have an idea of the costs, you can decide whether paying for financial advice is right for you. Fees can be fixed and percentage based and options may include a one-off advice fee, an upfront once-only fee, and ongoing annual fees. You must be provided with a copy of the advisor’s Financial Services Guide (FSG) which explains fees, the services they offer and how they deal with complaints.

on track

Staying on track

7. What are your fees and how are you compensated?

As professionals in the personal finance industry, our reputation rests on every interaction we have with our clients. An advisor should be committed to being transparent and upfront about any costs and risks you may encounter, as well as your potential outcomes. The professional you partner with should explain their fee structure clearly and fully. This includes disclosing any commissions paid from selling financial service products.

8. How will you keep me on track with my goals?
A switched on financial advisor will also equip you with useful resources to help you manage your financial life and keep you on track to achieving your goals. Ask the financial advisor what their support looks like from a practical sense, such as tools to help with budgeting and cashflow, or insights through articles and events.

For more information on choosing a financial advisor, here’s some helpful links from the government’s moneysmart site:

While you’re in that stage of weighing up the right financial advisor for you, our next and final article in this series highlights how we go about delivering financial advice. 

Other articles in this series

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What is a financial advisor? – What to ask

Expanding on our initial article in the ‘What is a Financial Advisor’ series, this article outlines 8 key questions you should ask when seeking a financial advisor.

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What is a financial advisor? – The Tribeca Way

In the final article of our ‘What is a Financial Advisor’ series, we highlight how we go about offering value; and the thinking and tools that enable Tribeca to deliver financial advice in a different way.

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