9th July 2008
Have you thought of using a financial adviser?
The investment landscape has changed dramatically over the past 20 years, and we all need to consider whether we need professional financial advice to guide us through the increasingly complex investment world.
In today’s environment it is extremely important to make the best use of your financial resources. By managing your financial affairs effectively you are securing your future. Throughout your financial journey it’s important to ensure you remain informed and up to date.
Financial advisers – more professional, qualified and regulated
As the investment landscape has changed, so too has the demand for quality financial advice. This has resulted from both the complexity of investment markets and the growing demand for advice flowing from an ageing population.
In response, there has been greater regulation by the Australian Securities & Investment Commission (“ASIC”) which has resulted in financial advisers becoming more professional and qualified.
The Financial Planning Association of Australia is the peak body for financial advisers in Australia, and it has played a key role in improving the professionalism and qualifications of its members. Through appropriate tertiary education courses, many financial advisers are now qualified Certified Financial Planners or “CFPs” and the level of professionalism continues to improve.
ASIC has also played an important role in the licensing, regulation and monitoring of financial advisers. Financial advisers will either hold their own Australian Financial Services Licence (“AFSL”) or, more often, they are Authorised Representatives of “Dealer Groups”, who will hold their own AFSL. To obtain an AFSL, the Dealer Group or financial adviser must satisfy ASIC that it has the appropriate resources, expertise, and systems to provide financial product advice. The Dealer Group also has the responsibility for monitoring the activities of its financial advisers, and ensuring that the financial advice provided is appropriate.
What should you expect from a financial adviser?
You should expect a financial adviser to provide you with relevant and appropriate financial advice, tailored to your personal needs. Your financial adviser should make a diligent effort to know your situation, they should know your financial objectives and needs, your personal requirements, and most importantly your tolerance to risk.
Your financial adviser should, in fact, become your personal trainer for your wealth management, and should offer advice about the fundamental protections for your financial well being, now and for the future.
A financial adviser should not only provide you with financial product advice but also advise you in relation to a range of other matters not directly related to investments. These matters include ensuring that you have a current and valid power of attorney, whereby you appoint someone to handle your affairs if you become unable to do so, and a current and legal will. These documents should be prepared by a qualified solicitor and are vitally important in a comprehensive financial plan. Your financial adviser should also give you advice in relation to income protection insurance, in the event that you are unable to work, and life insurance, to protect your family in the event of your death.
All these are necessary for your financial wellbeing and protection.
How much will you have to pay for the financial advice?
How much you have to pay will depend on the complexity of your financial affairs and the amount of work that your financial adviser has to do in preparing a comprehensive financial plan for you.
The important point is that you understand the basis upon which your financial adviser will charge for the advice. Financial advisers are paid either on a commission basis or on a fee-for-service basis. You should make sure that you understand how you are going to be charged, and be prepared to negotiate with your financial adviser. You should receive a “Financial Services Guide” from your financial adviser, outlining the basis upon which you will be charged.
As a client of a financial adviser, it is imperative that you understand the fees and commissions structures that go hand in hand with the service being provided.
Can La Trobe provide you with financial product advice?
La Trobe holds an AFSL that authorises it to operate managed investment schemes that invest in mortgages. We operate the La Trobe Australian Mortgage Fund, which offers four different investment options from which you, as an investor, can choose, according to your attitudes towards risk and return.
However, La Trobe does not provide any financial product advice; so, for example, we cannot advise you in which of the four investment options you should invest.
Your financial adviser would be the person to look to for advice in relation to investing in our Mortgage Fund, and selecting the appropriate investment option for you.