How to find a new Financial Planner

By Nick Bruining

Be resigned to changes coming from advice sector

Get ready, you might be about to receive a letter of resignation. This one will be a little different because it will be from your financial adviser.

An analysis by research house Adviser Ratings expects an exodus of nearly half of the current list of financial advisers over the next few years.

This is on the back of tougher educational standards to apply from 2024 and the wash-up from the banking royal commission. A trickle for now, most industry players expect it will turn into a flood during the next couple of years as new, tougher standards are announced.

The first question to your existing adviser should be: How are you impacted by the 2024 changes and what are your plans?

If a departure seems likely, you will need to be on the front foot in sorting out a replacement from the limited pool of good advisers remaining. If not, you might end up with someone that’s not for you.

Like picking a good doctor or dentist. You start by speaking to friends, colleagues and neighbours.

Ideally, you’ll be looking for an adviser they’ve used, that has the runs on the board and has been around for a while. It’s not the fun times we’ve had in the last few years you are interested in.

You need to look into how they dealt with your mate through the global financial crisis. Dig into how they keep your mate up to date with the rule changes that necessitate regular tweaking of financial plans. Also see how the planner deals with the inevitable stuff-ups or even a significant life event, such as a divorce or death of a close relative.

The tough times sort the wheat from the chaff and reveal the true professionals.

Experience is going to be important but it won’t guarantee competence.

Essentially, you’re looking to bypass the products-flogger culture that underlies most of what happens in financial advice. You want a genuine financial adviser, not someone whose main concern is to move you across to the platform and products pushed by the big corporation that owns their dealer group.

A good start is the “getting advice” section of the website.

Follow the questions to ask about education, who owns the business and what hands-on assistance your fees will be paying for. Newsletters, reports and briefing notes are routinely churned out by the millions.

You’ll want to know how many face-to-face meetings you’ll be having, what will happen at these meetings and what services beyond the meetings are provided.

Ask how many clients the adviser has on the books. If there’s going to be a faceto-face meeting twice a year and a full analysis of your situation then, realistically, 250 clients is stretching it, 200 is manageable.

Be wary of small operations that constantly advertise. Good planners keep their clients because they’re happy. Poor planners need to keep replenishing those clients who have walked away.

Be suspicious if it all seems to turn on you buying a new investment when there’s no clear and understandable reason for doing so.

Good financial planning advice is about outcomes, not products. There’s many a good plan that doesn’t need anything new, just adjustments and a few tweaks to what you have already.

Ask about the other payments made by the fund managers and product manufacturers to your adviser or parent firms.

Sometimes there can be extra kickbacks that apply when the volumes build.

The Financial Services Guide might mention them in the section headed “What You Pay” but it won’t mention that the firm is $10 million short of hitting a point where they’ll get an extra cut.