What to look for in financial advice
It's your money and your decision
Your adviser will make recommendations, but you must decide if
the advice is good for you. It's your money, after all.
Here we outline some things you should consider before you act
on an adviser's recommendations.
Receiving the financial
After your first meeting, the adviser will do some further
research and put together some recommendations.
You will receive the recommendations in writing, usually at a
face-to-face meeting, where the adviser will explain the
recommendations and discuss the reasons for choosing one path or
product over another.
You should receive:
- A Statement of Advice (SOA) - This sets out what the adviser
recommends and why they think it's suitable. It's important to
review this and consider how well it meets your needs and
- A product disclosure statement (PDS) for
each recommended product - These describe the features of each
Do not sign or agree to anything until you have read and
understand these documents.
Reviewing the advice
It's important to check the advice to make sure it addresses
your goals and takes into account your personal circumstances and
Take the SOA home to read before you agree to anything. Advisers
will often give you other paperwork to read. Be prepared to go
through the advice carefully. It might help to review the advice in
stages, beginning with the overall strategy and then moving on to
Write down any questions that come to mind as you read the SOA
and PDS. Don't be afraid to ask the adviser to explain if you're
not clear how the products or the strategy outlined in the SOA will
help you achieve your financial goals.
If the SOA or PDS contains words or phrases you don't
understand, use our glossary to search for a plain language
What to look for in a Statement of
Here are some tips on what to look for in the SOA.
Your situation needs and objectives
- Does it address the reasons you sought advice?
- Are the recommendations customised for you or could
it have been written for someone else?
- Does it document your personal circumstances and goals?
- Does it refer accurately to your assets, liabilities, income
- Does it state your risk profile and why that risk profile
is appropriate for you?
The strategy and scope
- Does it have a defined scope and explain what advice is and
isn't being provided?
- If your financial needs are complex, does it compare strategic
options, including the advantages and disadvantages of each?
- Does it give you cash flow projections (where relevant) to show
how the recommended strategy will fit your income and
- If it includes product recommendations, does it explain how
these products fit into the overall strategy and your risk
- If the advice is to switch products, does it clearly explain
what benefits you might gain and what you might lose as a result -
for example, consolidating super might save you fees but will you
lose some insurance?
Don't feel pressured to accept the adviser's recommendations. If
you're unhappy with any aspect of the advice or service, you should
talk it over with the adviser.
If you are still not satisfied you can make a complaint. For
more information, see problems with a financial
See questions to ask a
financial adviser for talking points you can use to check any
of the recommendations outlined in an SOA.
Case study: Lawrence does some research before he gets
Lawrence decides to see an adviser about his super.
He wants to be prepared for the first meeting, so he:
- searches for lost super on the ATO website
- contacts his super fund and confirms his account balance,
insurance cover and the fees he's paying
- uses our superannuation calculator to
get an understanding of how much he's likely to have when he
When he meets with the adviser, she recommends he consolidate
his super into a new fund that she says will give him better
Lawrence is alarmed because the adviser asked him very few
questions about his needs and objectives, and did not investigate
the suitability of his existing super fund. The adviser also failed
to give him an SOA or the PDS
for the super fund she recommended.
Lawrence decides to take the application form for the new super
fund home to review first. He also tells the adviser that he won't
agree to her recommendations until he's seen an SOA and the
When Lawrence investigates the recommended super fund, he
discovers that the fund's investment performance was lower than the
adviser said, once the fees were taken into account. Lawrence also
realised that the fees were higher than his existing fund and the
adviser would get a large fee to facilitate the rollover of his
super. She would also get a large commission if he signed up for
the life and disability insurance within the recommended fund.
Lawrence decides not to act on the advice and is very glad he
reviewed it thoroughly before he agreed to the recommendations.
Lawrence also decides to find another adviser.
If you don't understand why a particular
investment has been recommended or the risks associated with that
investment, ask the adviser to explain why it's suitable for you.
If you're still not sure, don't be afraid to ask more than
Last updated: 06 Mar 2018