Creating value: What should you expect from your adviser?

When it comes to your finances, picking the right adviser can make a world of difference. In the wake of the Royal Commission into the finance sector it’s certainly made many people who either have an adviser, or are contemplating working with one, reassess what it is they’re looking for.

There are plenty of factors to consider, and it is always up to the individual to assess which ones mean the most to them and their personal situation. As an adviser, I look at how we work with our clients at Apt Wealth and consider the value that we create for them. In looking at it from that perspective, it provides a view of what ‘value’ means and what, in my opinion, you should be looking for in your relationship with a financial adviser.

1. Fundamentals – Education, experience, set up

It doesn’t take a rocket scientist to understand that a financial adviser needs to have a solid background in understanding the world of finance. In assessing a potential adviser relationship, you need to check off the fundamentals: What is their level of education, qualification, and experience?

For example, the Certified Financial Planner designation (CFP®) is considered the gold standard in financial planning circles. To achieve the CFP® designation, planners must take extensive, specialised coursework, pass exams, and accrue relevant experience. Every year, advisers holding this designation must also complete specified levels of continuing education. It provides a solid starting point when assessing your adviser’s background skill set.

Experience is an interesting one: Just because you’ve been doing something a long time doesn’t mean you’re automatically good at it. I think it’s an important factor, but weigh that against the firm/adviser’s track record in delivering results for their clients.

The set up of the firm is also important. What support and resources are behind your adviser? Are they part of a team or is it a one man/woman show? It’s a good scenario in my view to have a team that knows your specific situation and can work together on your financial goals.

2. Transparency – privately owned, clear fees, and a strong review process

The second area I’d advise you to look at is all around transparency. Firstly, what ties do they have to institutions or product providers? The Royal Commission highlighted this in its findings; focusing on a firm that has your best interests at the centre, rather than a specific product line, is crucial.

Secondly, how transparent is the fee structure? Make sure you know what the fees are and what you’ll get in return for them. For example, can you ring your adviser any time life throws up a challenge, or are you locked into a specific schedule? How many meetings are you entitled to per annum and what should you expect to receive from them? What online resources and tools are available to you in support of your goals? Being clear on this upfront will save you from challenges down the line.

Thirdly, what are the firm’s processes around investments and compliance? On the investment front, are they using both internal and external resources? What’s their investment philosophy and is it clear? Ditto for compliance, how are they reviewing their performance and adhering to industry standards? It’s important to know that upfront.

3. Relationship – what really matters!

Financial performance, a solid team, and a transparent set up are all core, however for me selecting the right adviser has a lot in common with other professional service relationships: You want someone that you trust and who knows you.

When you’re discussing your finances it’s an intimate conversation: We’re going to discuss some very personal areas of your life and where you want to take it. This is where the value of an adviser truly sits: In understanding you and your specific situation. They need to understand your goals, your dreams, and where you want to go in life. That’s what makes the difference between a good adviser and a great one: The ability to build trust and a relationship that goes the distance. In every strong adviser relationship I see that deep level of engagement, the adviser knows you, your family, and what is going on in your life. They can connect you with resources around your money to help you navigate life’s challenges.

Ideally, you want an adviser that is younger than you. Why? You don’t want to reach retirement and find that your adviser is signing off as well! It means you need to go through creating a whole new relationship with a new adviser and while it’s not impossible; it’s a hassle to avoid if you can.

The right adviser will give you the confidence and peace of mind to live a happier, healthier, less stressful life. If you nail this part, then I’m confident you’ll also reach your goals and be able to live for today, while planning for tomorrow.

General Advice Disclaimer

The information in this blog is provided by Apt Wealth Partners (AFSL 436121 ABN 49 159 583 847) and is of a general nature only. It may not be relevant to your personal needs, objectives or financial circumstances. The circumstances of each investor are different and you should seek advice from a financial planner who can consider if the strategies and products are right for you.