Determining what makes a good financial advisor, is subjective in some ways, but can be defined in others. This blog is written to help you find a good financial advisor, and recognise what ‘good' looks like.
Fundamental to a good financial advice relationship is that your advisor gains a deep understanding about you and what is important to you. This way you should always feel at ease and understood, and when you receive your advice, it should sit comfortably with you, and make sense to you.
At the end of 2022 there were 15,819 financial advisors in Australia. This is a big number to whittle down and we'll explore how you can do that effectively.
How to evaluate good financial advice in Australia
Great financial planning advice has the potential to deliver life changing outcomes. However what you need and value from a financial advisor, may differ to other people. Financial advisors deliver value in four ways, which we have listed below. By evaluating these, you will be better placed to determine what makes a good financial advisor for you.
- To feel confident you are speaking to a good financial advisor, you want to know they are highly qualified and up to date. A good financial advisor will typically be university degree qualified and have specialist qualifications. One way of shortlisting advisors academic qualifications is to look for a Certified Financial Planner (CFP®). CFP's have a higher education bar, including a minimum degree qualification and industry experience. There were 4,610 CFP® in 2022 or 29% of Australia financial advisors.
- At the end of the day, a big part of the reason you are engaging a financial planner is to help you make and protect your money. A good financial planner will introduce you to strategies and opportunities that achieve this for you. Strategies including; investing; tax planning; and retirement advice, can be quantified into direct financial benefits. A good financial advisor can quantify the financial benefit of their advice. Therefore, a way to test an advisor upfront, is to ask them for evidence of the financial benefits they create. A wishy washy answer is usually a red flag.
- Trust and security, comes from feeling understood and cared about, and seeing the results that follow. The best financial advisors deliver on this in spades. Research we have done here at Yield has shown that the thing our ongoing clients value the most, is their sense of security. This is because once results are achieved, trust develops, and this lets them get on with enjoying life. When you speak to a financial advisor, trust the way you are feeling. If you feel listened too and understood, and the solutions they are outlining sound achievable, then you are probably speaking to a good financial advisor that can help you.
- When it comes to money, the equation is always, money for time or time for money. The practical support a financial planner delivers is an example of exchanging money for time. This is because the work your financial advisor does for you, you would otherwise need to do yourself. Things like formulating your financial plan and then implementing it. Besides the fact you may not have the skillset to do this, if we assume that you do, there are a lot of practical steps that take time. Implementation includes dealing with investment providers and insurers, or liaising with Centrelink for example. A good advisory team will handle this for you seamlessly. This will include working with your related professionals like your Accountant or lawyer, making your life simpler.
Do some research on the financial advisor you plan to meet
Before you go and see a financial advisor, you should do some homework on them. There are so many ways to do this these days! One tried and tested approach is to speak to friends or family that are in a similar position to you, to find out if they know anyone personally.
If they have been having a good experience they should be really open and confident referring you. Similarly if you have a trusted Accountant or other professional, they may know of an advisor and can be a good source of referral.
You should always look online as well. Even when you are given a referral, it can give you additional insight to see how aligned you feel. By looking at the advice services they offer and the typical clients they serve, it will give you more insight on the cultural alignment for you.
You should also be able to find customer feedback online these days. Google reviews for example are one way that clients will leave their experience both positive and negative, and can provide valuable insight for you. Facebook and others social media platforms have similar reviews too.
Other valuable research you can do is to look at the company website for case studies. Case Studies provide a window into the actual advice the firm is providing clients. Feedback we are given regularly, is that case studies we publish on our website helped them feel confident that we could be good financial advisors for them.
Think about the team supporting the advisor
The old adage of “you're only as strong as the weakest link” is highly relevant in the financial advice industry. Because your financial advisor is likely not the only person working for you. And if they are, you should question whether one person can really do it all!
Great financial advisors are collaborative. This means learning from, and teaching others around them. As a client, if you identify a great financial advisory team to work with, you can feel confident that you are going to have a good client experience. This also means that if your advisor retires or leaves the profession for some reason, your good financial advice journey can continue.
The company website and social media pages should provide insight into how the team functions. As well as share the values that bind them.
Once you engage with the firm, be sure to consider your experience with the whole team where you can. This can provide great insight into whether they are good financial advisors for you.
Why good financial advisors are worth the effort to find
Finding a good financial advisor is an investment of your time and ultimately money. Because the opportunity cost of choosing an average ‘or worse' poor advisor could be costly.
The difference between average and good in finance, can be exposed very quickly. Volatile markets, changing trends, and ever-changing regulations, are inevitable realities of finance. Good financial advisors will help you navigate this.
To be at the leading edge of financial planning, you need extensive knowledge and expertise. The best advisors marry this with interpersonal skills that connect with you.
Be patient and objective, and you should identify what makes a good financial advisor for you.
Why Yield are good financial advisors
Yield Financial Planning is a multi award winning firm with over 80 5′ star google reviews.
We are also an FAAA professional practice, which is a rigorous process and rewards high professional and ethical standards.
As a team, we are diverse, share knowledge regularly and are bound by our values. And our advice expertise extends to many areas of personal advice, including investing, retirement advice, SMSF and tax structuring.
If you are seeking highly personalised advice in your best interest, book a complimentary conversation today.