Good to Great: How to Scale With an Outsourced CFO

In 2011, the Financial Services Council (FSC) estimated that individuals who took the initiative and sought financial advice would be better off at retirement. Come 2020; they were between $29,000 and $91,000 better off––to be precise.

That right there should be motivation enough to schedule an appointment with a financial adviser to get the ball rolling. And since there is no time like the present, we'll jump right into it with seven relevant questions to ask your financial adviser.

 

1. Are you reputable and financially viable?

Fraud. It's out there and life-changing if it meets your finances. Asking this question will eliminate financial advisers that may have been the subject of client complaints or disciplinary action by Government bodies.

If you find this question daunting, there are resources that you can utilise to keep you on the front foot. FINRA, The Financial Industry Regulatory Authority, offers a Broker Check that details licenses, records of complaints and any disciplinary violations of financial advisers, as well as employment history.

 

2. Do you have an investment philosophy?

Determining whether a potential financial advisor has a well-defined philosophy that reflects your needs is essential. Identifying whether their values, principles and ideology match yours will bring you confidence when discussing your financial objectives.

 

3. How long have you been delivering financial advice?

Ideally, the more experience, the better, but if the adviser has been in the game less than a couple of years, ASIC suggests asking "whether anyone else in the business, with more experience, will check the advice given." 

 

4. How many clients do you have at present?

You want a financial adviser who considers you a client, not a customer. You might be curious as to what the difference may be. In this industry, customers are transactional. They exist only to make a transaction and come in droves. On the other hand, clients seek your advice and stay around long enough to build a relationship. 

Stay away from financial advisers that take the 'customer' approach. You will only become a number. Instead, opt for an adviser that takes the 'client' approach. One that treats your finances as if they were their own and in your best interests.

 

5. Who will provide my investment advice and meet with me?

You want to ensure that the financial adviser you meet with is the same financial adviser who will look after your portfolio.

According to Moneysmart, if your financial adviser is charging you an ongoing advice fee, then they should at least meet with you once a year to discuss your financial situation.

Use this time to talk about whether or not there are any changes to the goals you have set. And whether your financial situation has changed, including income, expenses or assets. 

Discuss how you are presently tracking against your goals and whether any economic, legislative or product changes have the potential to affect you. Perhaps you want to adjust your plan, or maybe the level of risk that you are comfortable with has changed.

 

6. How costly will this advice be? And will you itemise all your charges in writing?

Transparency is key, so knowing the entirety of your charges is essential. These may include but are not limited to internal fund fees, advisory and ancillary charges such as trading costs. You are within your right to ask for regular account statements and invoices showing expenses breakdown.

 

7. Do you receive commissions or incentives from the financial products you recommend?

Don't be afraid to ask. It's an important question, and as a client, you may be concerned that utilising commission-based products poses a potential conflict of interest and should be avoided. 

Even though financial advisers receive rewards via fees and commissions deducted from your investments, legislation requires full financial product disclosure to clients.

The Corporations Act 2001 introduced requirements for financial advice to be provided before any 'financial product' is purchased. Asking saves you from searching for the fine print and gives you clarity on the recommended financial products.

If you are still concerned after asking this question, a fee-only arrangement may be the way to go as it eliminates any conflict of interest with your financial adviser. 

 

In Conclusion

This list of questions is by no means exhaustive. If you want more information, head over to Altus and find out How to Get More From Your Financial Adviser.

And remember, you are free to ask whatever leaves you feeling comfortable. However, by using the above as a starting point, you can start evaluating who you consider the best choice when choosing your financial adviser. 

So if there is one thing you take away, let it be this, partner with an adviser that matches your objectives and can address your concerns openly from the get-go. 

Start a conversation with Altus, and an experienced adviser can work with you to determine the level of risk you are comfortable with and the types of investments that will suit you moving forward.