An investment adviser helps you choose and make investments. Some advisers will offer additional services such as investing on your behalf (see DIMS below), or financial planning.
An investment adviser works with you to:
Find out more about working with an adviser and the rules that apply to all financial advisers.
If an adviser is providing investment advice and has suggested certain investment products, they should make sure you have enough information to make an informed decision. This could include:
Some advisers may only be able to offer advice on products offered (manufactured) by their employer – for instance an adviser working for a bank may only advise on investment products offered by that bank.
Generally, you’ll be a retail investor unless you meet certain criteria, for example, you’re investing through a family trust or you have a large sum of money. If this is the case, you could automatically be considered a ‘wholesale investor’.
Make sure your adviser explains very clearly what a wholesale investor is and the implications for you. Wholesale investors have less protection if things go wrong. We expect advisers will only recommend you become a wholesale investor if you have significant experience in investing and investment markets. You can opt out of being a wholesale investor if you want to.
Some advisers will recommend you manage your investment through what is known as a ‘wrap platform’. Others may offer a ‘discretionary investment management service’, known as a DIMS.
Wrap platforms are online services that can be used directly by you or by your adviser.
Your investment information is held in one place and you usually receive consolidated reporting, making it easier for you to track the performance of your investments. You may also have access to some funds not available individually.
It’s important to note – that if you’re only investing in one or two funds, it can be more expensive to use a platform. You should also check it isn’t only available to clients of a particular advice firm. If it is and you change advisers, you may have to leave the platform and pay fees and taxes.
With a DIMS, your adviser handles the day-to-day management of your investments on your behalf. Your adviser needs to be acting under a licence or have the authorisation to provide a DIMS. Your adviser will take you through the relevant paperwork needed to sign up to a DIMS.
Before you sign anything ask:
Letting someone else make investment decisions for you doesn’t mean losing control. Most advisers behave professionally and are legally obliged to do the best for their clients, but it’s still important to keep informed about your investments.
Your adviser should have a written plan for you.
Help protect yourself by asking as many questions as you like - until you’re confident you understand what you’re investing in.
The amount you pay for investment advice will depend on how complex your needs are. To give you an idea, you could initially pay anything from $250 for some simple advice, up to $4,000 for a comprehensive financial plan. You may pay more or less than this depending on the adviser you use and there will be other ongoing costs to consider.
Your adviser may be paid in several different ways
In addition, you may also be charged other fees, including
Also, ask if there are any cancellation fees and in what circumstances any of the above fees would be refunded.
TIP: If your adviser quotes their fees in percentages, ask them to convert it to dollars to get a better feel for what you’re paying.