Financial advisers are people who give advice about financial products. They can include financial planners, insurance brokers and people working for financial institutions such as banks, insurers, fund managers, sharebrokers and building societies who provide advice about money and investing. Using an adviser doesn’t safeguard you from losing money. All investments carry some risk, and that’s one of the things investors get rewarded for in the returns they receive. But a financial adviser should be able to help you make better investment choices. They should recommend investments that suit your personal circumstances and goals, and should be able to explain investments to you in plain English. Financial advisers should also be able to identify ‘investments’ that are really scams or have pitfalls buried in fine print.
All financial advisers who advise retail clients have to belong to a dispute resolution scheme. This is an independent organisation that will help resolve any disputes over investments that you haven’t been able to sort out directly with your adviser. It’s free for you to use their services. If you have concerns about the behaviour of a financial adviser, you can also complain to the financial adviser regulator, Financial Markets Authority. For example, you may feel they have not put your interests first, have misled or deceived you, or have claimed to be a financial adviser when they were not allowed to do so.
People who succeed at investing do their homework before they hand over any money. Here are some places you can go for more information.
FSPR website – The official register of financial advisers.
Sorted website – Information about investing, saving and retirement planning. You can also contact Financial Markets Authority on 0800 434 566.
Is the adviser licensed to provide the product or service you need?
There are different types of financial advisers.
Is the adviser on the register?
You can find out more about the RFA or AFA you are dealing with on the public register at www.fspr.govt.nz. The register will tell you their business address and list the financial services they can provide. QFE advisers don’t have to be listed individually on the register but the financial service company they work for must be there. If a person giving you financial advice is not on the register when they should be then don’t deal with them. Let us know.
How will the adviser be paid?
Advisers often receive commissions or other sales related incentives if you buy an investment product. AFAs must give you a disclosure statement telling you the range of products they offer, the fees they charge and what commissions or other incentives they receive. Your adviser should give you this statement before they offer you advice and before you pay them any money. You should not have to ask for it. QFE advisers providing advice on investment products also have to tell you how they will be paid.
If an adviser is giving you personal investment advice you should expect them to do the following types of things:
An adviser should not:
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