What is financial advice I sometimes ask myself. Your average member of the public thinks all advice is independent advice. It’s not. And people need to be very wary of anyone called an "adviser" or "coach".
Many RaboPlus customers make their own financial decisions. But some cash rich, time poor people like to take advice from others.
When looking for a "financial adviser" the key question is what training and qualifications does your "adviser" have. You should also check that they belong to a professional body such as the
New Zealand Stock Exchange, the Institute of Financial Advisers, or the New Zealand Institute of Chartered Accountants.
Even financial advisers with the Chartered Financial Planner qualification have come in for criticism in recent years thanks to the fact that they get commissions for the managed funds and insurance policies they sell and some have sold investments such as Bridgecorp debentures a little too eagerly indeed for over generous dollops of commission.
One leading Australian-owned bank has come in for criticism in the NZ Herald
for getting clients to invest large sums of money in investments from related companies. Those investments subsequently went pear-shaped.
One way around this if you don’t want to make all your own investment decisions, is to choose an adviser who charges a fee and doesn’t take commissions. They are rare in New Zealand because we’ve got it in our psyche that advice isn’t worth paying for.
One difficulty for genuine independent financial advisers is that their clients often want to hear that their money is going to double in five years, that investment properties are no risk, or that their capital is guaranteed come what may.
I’ve been writing an article for the NZ Property Investor Magazine this week about packaged property investments. One company selling new properties was telling clients that they can expect on average 5% per year growth over the next 10 years and the other was saying 10%. Both were selling property in the same town.
Some of the property sales hyperbole I came across in that investigation from companies offering "advice" was outrageous.
Unfortunately when it comes to property sales, the people who claim to be "advisers" and even sometimes "coaches" are in fact just sales people. The moral is, if an "adviser" is selling property or financial products for just one company then they’re worthless in terms of independence.
Have you found an adviser worth his or her weight in gold? Or were you taken for a ride?