Text version: Financial advice and you
About this booklet
This booklet will help you with:
- the kind of financial advice you need
- the best place to get advice
- how to get the most from your conversations with a financial
Even if you're on a modest income you can benefit from financial
advice. You may even be able to access some kinds of advice for
free. This booklet explains all these things and more.
The right kind of financial advice can really make a big
difference. It can help you:
- set your financial goals and achieve them
- make the most of your money
- get any government assistance you're entitled to
- feel more in control of your finances and your life
- avoid expensive mistakes
- protect your assets.
Financial advice can give you confidence that your future plans
If you're not on track to achieving your goals, financial advice
can help you put the right strategies in place, or come up with
more realistic goals.
Case study: Jim gets a reality check
Jim was 55 and wanted to retire in a few years. After retiring,
he planned to buy a new car and travel overseas for at least 6
months. Jim thought he'd need about $50,000 a year in retirement
income. Jim went to see a financial adviser about his plans.
The adviser explained that Jim didn't yet have enough money to
fund the retirement he'd like. To help Jim get closer to achieving
his retirement goals, the adviser outlined the pros and cons of
different strategies, including working longer, increasing super
contributions and downsizing to a smaller property. The adviser
also explained how Jim's retirement income would be reduced if he
bought a car and went on a big trip.
After receiving this advice, Jim decided he needed to rethink
the length of his trip, stick to a budget and increase his super
contributions. Jim was glad he got financial advice as he now has a
realistic plan for his retirement and the steps to achieve it.
Smart tip: Use ASIC's MoneySmart online retirement
To find out the income you can expect to get in retirement from
your super and age pension use our retirement planner. It also lets you
explore ways to better meet your goals.
When advice can
There are some turning points in your life when professional
financial advice may be particularly useful, including:
- approaching retirement
- thinking about starting a family
- being made redundant
- inheriting money.
These and other life events might prompt you to look at your
Important: Get licensed advice
Throughout this booklet we use the term 'financial adviser' to
describe someone who holds an Australian financial services (AFS)
licence or is authorised by an AFS licence holder. An adviser may
also call themselves a 'financial planner'.
See 'Choosing an adviser' for more
information on how to check the financial advisers register
to see if an adviser is licensed to give you financial advice.
You may have avoided getting financial advice because you're not
sure how a financial adviser can help you. You may also think
you'll have to pay for a comprehensive and expensive financial
plan. Depending on the kind of advice you need, you may not.
Smart tip: Get free financial counselling
If you need financial advice because you're having trouble
paying your bills or need to sort out your debts, see a financial
counsellor first. Use our map to find your nearest financial
counsellor or call the National Debt Helpline on 1800
Instead of financial advice, you may simply:
- want factual information about different financial products and
- need to understand more about financial services
There is a lot of information online that can help you with
questions about your finances:
- ASIC's MoneySmart website - moneysmart.gov.au
- Australian Securities Exchange's online courses and education
website - asx.com.au
- your super fund
- financial columns and blogs.
Banks, credit unions or building societies
Bank, credit union and building society staff can give you
information about their products such as savings accounts and term
deposits. This might be all the information you need if your main
financial goal is saving for a home or building a savings buffer.
Remember they won't tell you about all the products on the market
so you should shop around and compare products.
Smart tip: Use ASIC's MoneySmart savings
Set up a plan to reach your savings goals with our savings
Your super fund
Your super fund can provide factual information, including:
- investment options within your current fund
- how to make extra contributions to your current fund
- how to consolidate multiple super funds
- insurance options within your current fund.
The Department of Human Services' Financial Information Service
offers free money seminars all over Australia. Topics include:
- managing your money
- reducing your mortgage
- understanding superannuation.
Financial Information Service officers can also give you
information over the phone or at a face-to-face interview. Visit humanservices.gov.au or
call 13 23 00 for more information.
You can get general advice about financial products or investing
from a financial adviser. General advice does not take into account
your particular circumstances, such as your objectives, financial
situation and needs. For example, you may receive general advice
when you attend a seminar about investing.
Case study: Kathy gets general advice from her super fund
Kathy and her husband had just bought a new house. Kathy decided
to check if the life and total and
permanent disability insurance she had through her super fund was
enough to cover her share of the
repayments if she died or couldn't work any more.
When she called her super fund the person she spoke to explained
they could only give her general advice. Kathy was given
information about the features of the insurance products and her
current level of cover. She was also advised to consider all her
debts and expenses not just her mortgage repayments. Kathy realised
she needed to have a closer look at her finances to work out the
level of cover she needed.
Smart tip: Financial services from an
If your accountant provides advice about your self-managed super
fund, you should check they hold an Australian financial services
(AFS) licence or are authorised by an AFS licence holder. Search
for their name on ASIC's financial advisers register
to check what products they can advise on.
If you want a recommendation that takes your personal situation
into account, you need personal financial advice.
For this kind of advice, it's important that you only talk to a
licensed or authorised financial adviser.
See 'Choosing an adviser' for more
information on finding a licensed adviser.
Types of personal advice
Personal advice can range from simple advice on one topic to a
comprehensive financial plan.
Some examples of personal advice are:
- Simple, once-off advice on one issue - This
addresses a particular aspect of your finances (for example, the
best way to contribute to your super).
- Broader financial advice - This involves a
comprehensive financial plan to help you set goals and covers
investments, superannuation, insurance and retirement
- Ongoing advice - This involves regular reviews
with a financial planner that reassesses your goals, financial
position, strategy and investments.
See 'Working with a financial
adviser' for more information on how you can agree on the
scope of the advice with an adviser.
Different ways to get information or advice
Factual information or advice on simple topics can be given by
phone, online advice services or email, while complex advice is
usually better suited to a face-to-face meeting or video
Internet options such as Skype also allow people in rural and
remote areas to access advice.
The cost of the advice will depend upon the scope and kind of
advice you receive. For more information on paying for advice, see
'Paying for advice'.
Before you contact an adviser think about the kind of advice you
want, and what you'd like to achieve from the advice. This will
make your initial discussions more useful and help you find an
adviser that suits your needs.
Steps to choosing a financial adviser
Step 1: List a few 'possibles'
Professional associations usually have 'find an adviser'
services that will help you find an adviser in your area. They also
have a code of conduct for members to follow.
Visit our list of professional
associations you can contact.
Step 2: Check the financial advisers register
Once you have a short list of possible advisers, it's important
to check ASIC's financial advisers
register. The register tells you the adviser's experience and
employment history, the product areas they can provide advice about
and whether the adviser has been banned or disqualified from giving
The register also tells you the name and number of the
Australian financial services (AFS) licence holder who employs or
authorises the financial adviser to provide advice, as well as who
owns or controls the licence holder. Many advisers are linked to
banks, fund managers and life insurance companies. This can affect
the services and products offered. Check the financial advisers
Step 3: Get their financial services guide
Once you have a few possible advisers, get a copy of their
financial services guide (FSG) by visiting their website or by
phoning and asking them to send it to you. The FSG will say what
services they offer, how they charge and whether they receive any
additional payments or benefits.
Step 4: Check for qualifications and experience
You should check if the adviser has the right experience and
qualifications for your needs. During the conversation, make sure
the adviser focuses on the services and strategies they can offer
you, rather than the products they can sell you.
Step 5: Check they can advise on your current products
You should check that the adviser can provide advice on your
current financial products. This is critical when it comes to
super, as the adviser may not be able to give advice about your
current fund, if it is not on their 'approved product list'.
Be careful of advisers who only sell one investment product or
Step 6: Check the fees
Ask the adviser for an estimate of the cost of the advice. Even
a rough estimate will give you an idea of what you'll be paying.
See 'Paying for advice' for more
information about the cost of advice.
Use these questions to check an adviser's qualifications and
Q: How long have you been giving financial
Listen for: Details about their level of experience.
Q: What qualifications do you have?
Listen for: Qualifications in finance, economics, accounting or
financial planning. A degree qualification in one of these
disciplines is desirable.
Q: What are your clients mostly trying to
Listen for: People with concerns and goals like yours, for
example retirement planning or young families.
Q: How do you get to know a new client?
Listen for: Aims to get a full picture of your circumstances and
needs by asking you questions about your current situation as well
as your financial goals, both long term and short term.
Q: How do you deal with a client who has a few different
Listen for: Will help you prioritise your financial goals,
explain and discuss choices with you and develop a strategy to
achieve your goals. They should help you refine your goals if they
realistic and achievable.
with a financial adviser
You've chosen an adviser. Now it's time to begin the process of
Before the first meeting
Before you meet the adviser for the first time, do some
preparation. Good advice depends on a clear picture of your
For example, for retirement advice, you could start by
- what you own - your home, savings, super, car, shares and other
- what you owe - debts, including mortgages, loans and
outstanding credit card balances
- income and expenses
- what insurance you have and for how much.
At the first meeting
Your adviser will need to collect detailed information about
you. This is so they can work out your needs and objectives.
Give your adviser accurate information. If you are not honest
with your adviser or leave things out, you could get advice that's
wrong for your situation.
The adviser will need to know your financial needs and
objectives. For example do you want:
- to pay off your mortgage sooner?
- to build wealth and save for retirement?
- ongoing advice about investments?
- advice on consolidating super accounts?
- a plan that covers all aspects of your finances?
You need to be clear about which issues will be covered, and
which ones won't be.
Once you have established the scope of the advice, the adviser
will be able to give you an idea of the cost. See 'Paying for advice' below.
Know your risk tolerance
A good adviser will work with you to help identify the most
suitable strategy to achieve your financial goals.
If part of your strategy is to protect your capital, you'll be
looking for reasonable returns, without exposure to too much risk.
Higher potential returns usually come with higher risks, which is
fine if you have a long time to reach your financial goals and are
comfortable with the chance you may lose your capital. Never agree
to an investment product or strategy that you're not comfortable
with or don't understand.
Your attitude to risk can change with time and circumstances. If
you've agreed to ongoing advice, you need to tell your adviser if
your ability or willingness to take on more or less investment risk
Judging an adviser after the first meeting
|Generally, the meeting will
have gone well if:
|You should reconsider your
choice of adviser if:
- asks you about your circumstances and helps you identify
- has explained the scope of advice they can provide based on the
amount you are willing to pay
- is happy to explain complicated financial concepts until you
- pressures you to sign documents that you haven't read or don't
- doesn't ask about or listen to what you want
- seems to be pushing one solution, regardless of your needs
(e.g. an SMSF or borrowing to invest).
- are confident that the adviser understands your situation,
needs and goals
- are clear about the service you're receiving, what the advice
will and won't cover, and how much it will cost.
- don't understand why a particular strategy is appropriate for
- don't feel comfortable asking for explanations or feel
intimidated by your adviser.
At the end of the meeting your adviser will go away, 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
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
- a product disclosure statement (PDS)
for each product they recommend - these describe
the features of the products.
Do not sign or agree to anything until you have read and are
happy with these documents.
What to look for
in the advice
It's easy to be swayed by an adviser's confidence,
approachability and friendliness. Don't let this affect how you
judge the quality of their advice. Focus on the advice itself and
make sure it's appropriate for you.
Take your Statement of Advice (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 the detail.
Write down any questions that come to mind as you read the
advice and ask your adviser to clarify anything you're not sure
See more tips on what to look for in the SOA below.
Smart tip: It's your
The adviser will make recommendations, but you must decide if
the advice is good for you. It's your money, after
What to look for in a good Statement of Advice
Here are some things to consider when you read the advice:
Your situation, needs and objectives:
- Does it address the reasons you sought advice?
- Are the recommendations relevant to you or could it be written
- Does it refer accurately to your assets, liabilities, income
- Does it compare different options and explain the advantages
and disadvantages of each option?
The strategy and scope:
- Does it have a defined scope and explain what advice is and
isn't being provided?
- Does it give you cash flow projections (where relevant) to show
how the recommended strategy will fit your income and
- If your financial needs are complex, does it explain how each
piece of the strategy fits together?
- 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 your super might save fees but will you
lose some insurance?
- If it includes product recommendations, does it explain how
these products fit into the overall strategy and your risk
The first meeting
The first meeting with an adviser is usually free. During this
meeting, you and the adviser can discuss your advice needs and the
adviser can give you an idea of what they can do to help you.
The adviser will also be able to tell you how much the advice
will cost so you can decide whether to proceed any further. Make
sure the cost is given to you in dollars, not just a percentage of
the amount you have to invest.
Statement of Advice (SOA) fee
The adviser will prepare a Statement of Advice (SOA) that will
formally document the advice, the strategies and any financial
products they recommend. The cost for preparing the SOA will be
billed to you or may be deducted, with your permission, from the
balance of your investment.
The cost of the advice will depend on its scope and how the
adviser charges for their services. Advisers may charge a flat
dollar fee (also known as 'fee for service'), or a percentage-based
fee. You could be charged a combination of these fees. For example,
your adviser may charge a flat dollar fee for preparing an SOA but
charge ongoing advice fees based on a percentage of your
If you receive advice about insurance, you may not have to pay
for the SOA. This is because the adviser will be paid commissions
from the insurance company. See 'commissions' for more information.
Even if you decide not to proceed with the recommendations in
the SOA, you will generally be expected to pay for the preparation
of the SOA.
Fee for implementing the advice
If you decide to accept the adviser's recommendations there may
be a fee for implementing the advice. This pays for administration
You may be able to negotiate the rate with your adviser.
There are usually different options for how you pay. You can
agree to pay upfront or the cost can be deducted from the
Important: Protect yourself from fraud
To avoid fraud, never write cheques payable to your adviser if
the money will be used for investments. Make the cheque payable to
the product provider instead. If transferring money electronically,
only transfer money to the product provider.
Ongoing advice fee
If you've agreed to pay a fee for ongoing advice, it's important
to understand exactly what your fee will cover. Services may
- regular newsletters
- regular reports on your investment portfolio
- regular reviews with your financial adviser
- invitations to seminars.
Find out whether the fee entitles you to talk to an adviser if
you have questions, and whether the adviser will provide you with
an annual review.
Many advice businesses offer different levels of service, such
as 'bronze', 'silver', 'gold' or 'platinum' services, with fees
scaled according to the services you choose or the amount of
contact you can have with your adviser.
Advisers can charge another implementation fee in addition to
your ongoing advice fee if you want to change your finances
following a review.
If you've agreed to ongoing advice, you will receive an annual
fee disclosure statement that will outline the fees you paid, the
services you received, and the services you were entitled to
receive for the previous 12 months.
Carefully consider the information in your fee disclosure
- Have you benefited from the services you paid for?
- Were they worth the cost?
- Are you happy to pay the ongoing advice fee for another 12
You can end your ongoing advice relationship with your adviser
at any time.
Commissions and volume-based payments for recommending financial
products can influence the advice given by financial advisers.
Commissions have been banned on new investment and super
products since 1 July 2013. Some other commissions, for example for
selling life insurance, will remain.
However, if you bought a financial product before 1 July 2013
the adviser may continue to receive a commission each year for
advising on that product. The commissions will continue to be
deducted from the money you have invested until you leave that
product or end your relationship with that adviser. See 'Ending your relationship with an adviser' for
Information about commissions may not be included in your fee
Case study: Tom checks his fees
Tom has been receiving advice from his financial adviser for the
last 15 years.Tom has a portfolio made up of various managed funds.
Tom's financial adviser receives trail commissions of around
0.6% each year directly from the fund managers.The trail
commissions are the only fees Tom's adviser receives for his
ongoing advice services to Tom.
In this situation Tom's financial adviser is not obliged to
provide a fee disclosure statement, although he may choose to do
so. Tom can look at his statement from each fund manager to
understand the commissions and total fees he is paying.
Find out about the fees you're paying
If you're unsure about the fees you're paying, talk to your
adviser. Ask them to explain the products you have investments in
and whether they pay commissions.
If commissions are being deducted from your investment and
you're not happy with this arrangement, speak to your adviser about
your options. You may be able to switch to a product that
doesn't pay commissions, or arrange for the commissions to be
rebated to you.
Smart tip: Carefully consider your
It's important that you choose the right adviser for your needs.
Check the advice regularly, and make sure you understand it and are
happy with what you're paying for.
complain about financial advice
If you're unhappy with any aspect of the advice or service you
receive, try to talk it over with the adviser. If you are still not
satisfied (or your adviser won't meet with you) you should make a
complaint through the adviser's internal dispute resolution system.
The adviser's financial services guide will tell you how to do
this. You can also complain to the adviser's professional
You should receive an acknowledgement letter from the adviser's
internal dispute resolution system within 14 days. They have 45
days to give you a final response. If you're unhappy with the
response, you can contact the
Australian Financial Complaints
Authority (AFCA) to complain. Call them
on 1800 931 678.
Smart tip: Keep your paperwork safe
Stay informed about your investments by keeping all your
paperwork and checking for errors or things you don't understand.
Ask that all mail or emails about your investments be sent to you,
as well as your adviser.
What to do if your adviser is banned
When ASIC finds an adviser guilty of misconduct, they can be
banned from providing financial advice. If this happens to your
adviser, they will no longer be able to provide you with financial
If your adviser has been banned, review the advice you have
received. If you are not sure whether it is appropriate for you or
there is something you don't understand, raise the issue with the
advice firm. If you have received inappropriate advice, the advice
firm will need to rectify it. If you are still not satisfied you
can contact their external dispute resolution scheme.
relationship with an adviser
If you decide to end your relationship with an adviser, there
are some things you should consider first.
Some financial products can only be accessed through a financial
adviser, so if you decide to end your relationship with them you
may also have to leave the products they recommended, or get a new
The implications of this may include:
- selling and buying costs
- changes to any government assistance you're receiving
- being out of the market (which could be an advantage or
disadvantage, depending on timing)
- income and capital gains tax.
If you decide to switch advisers or leave an investment product,
you need to be satisfied that it is worth the cost.
Australian financial services (AFS) licence
A licence given by ASIC that allows people or companies to
legally carry on a financial services business, including selling,
advising or dealing in financial products. You should only deal
with an AFS licence holder or their authorised representative. You
will be protected if things go wrong and you will have access to
free dispute resolution services. A licence does not mean that
ASIC endorses the company, financial product or advice or that you
cannot incur a loss from the investment. ASIC grants a licence if a
business shows it can meet basic standards such as training,
compliance, insurance and dispute resolution. The business is
responsible for maintaining these standards.
A fee paid to an adviser or salesperson as a result of selling a
particular product. An upfront commission is based on the sale
amount of the product. An ongoing commission is based on the
balance of the account.
Financial services guide (FSG)
A guide that contains information about your financial adviser
and the AFS licence holder. It should explain the financial service
offered, the fees charged and how the person or company providing
the service will deal
Product disclosure statement (PDS)
A document that contains information about a financial product's
key features, fees, benefits and risks. A financial adviser must
give you the PDS when they recommend that product to you.
Self-managed super fund (SMSF)
A private super fund you can manage yourself. SMSFs are
regulated by the Australian Taxation Office and can have one to
four members. All members must be trustees to ensure they are fully
involved in the
decision-making of the fund.
Statement of Advice (SOA)
A document that sets out the advice given to you by a licensed,
or authorised, financial planner or adviser. It must include the
basis on which the advice is given, and information on any payments
or benefits the
adviser or licensee will receive.
See our glossary for an explanation of other key terms
ASIC's MoneySmart website has calculators, tools and tips to
help you with:
- Superannuation and retirement
- Borrowing and credit
- Budgeting and saving
Visit moneysmart.gov.au or call ASIC: 1300 300
Please note that this is a summary giving you basic information
about a particular topic. It does not cover the whole of the
relevant law regarding that topic, and it is not a substitute for
© Australian Securities and Investments Commission 2018
About ASIC and
The Australian Securities and Investments Commission (ASIC)
regulates financial advice and financial products.
ASIC's MoneySmart is our website for consumers and investors to
help you make smart choices about your personal finances. It offers
calculators and tips to give you fast answers to your money
Visit moneysmart.gov.au or call
ASIC on 1300 300 630.
Last updated: 12 Nov 2018