Getting good advice from a financial planner can be hit and miss, as the ACA/ASIC survey showed. While there are a number of high quality advisers, there are just as many very low quality advisers and a huge number of mediocre advisers. It isn't a lottery though, there are steps you can take to may sure the advice you are getting is good:

• Only deal with licensed (or authorised) advisers that provide you with a valid Advisory Services Guide or Financial Services Guide.
• If you require comprehensive advice, make sure the adviser is capable of delivering it. Unfortunately a large proportion of advisers do not offer a true financial planning service, they only offer a small subset of that - investment planning. Ask how well the adviser is equipped to advise you on issues other than managed funds, insurance and super and if possible ask to see a sample of their work before you engage their services.
• The initial fact finding and discussion process is the most important part of the financial plan. The old style 30 minute initial consultation may be adequate if all you want to do is buy some life insurance but preparation of a comprehensive plan requires detailed information. Expect that this process will take a number of hours and if necessary will require several appointments to discuss various issues and explain the strategy. The amount of data the adviser gathers off you is a very good indicator of the depth of the financial plan that adviser is going to deliver.
• The ACA/ASIC survey found that fee for service and fee plus commission advisers gave substantially better advice than commission-only advisers.
• Seek out several advisers so you can compare fees and the services on offer and ask for a copy of their Recommended Product Lists to ensure that there is a reasonably broad range of investments for the adviser to choose from. We consider this an important step. We're providing this list of how to spot good advisers so you'll know how to compare the service we offer with the advisers you will compare us with.
• Be wary of the advice of non-independent advisers who are restricted to a very small list of investments from only a few fund managers or advisers that only specialise in one asset class (like stock brokers or real estate agents).
• Statistically, there was no significant difference in the quality of advice given by CFPs and CPAs (Certified Financial Planners and Certified Public Accountants with financial planning accreditation), though CFPs and CPAs gave marginally better advice than advisers without those qualifications. Also, statistically advisers practicing pre-1997 gave worse advice than more recently accredited advisers, which possibly reflects the difference in attitude and training between the "old-guard" life agents of the 80s and 90s and the new influx of degree qualified advisers in the last few years. There was little evidence that FPA members gave better advice than non-FPA members, and much evidence that FPA members were failing to comply with FPA guidelines.
• Expect to see detailed justification of all strategies and products recommended, as well as discussion of alternative strategies. The adviser should mention and discuss basic strategies such as mortgage reduction or salary sacrifice before anything else. If you don't have a clear understanding of why a particular product or strategy is being chosen then ask for clarification. The best plans would either give a choice of options (with opinions given explaining which ones would be preferable and why) or should clearly state that there is no other viable option.
• If the adviser is recommending an in-house master trust or wrap service, make sure you clearly understand all the fees and can see how you might be able to transfer this to another adviser if for some reason you don't want to deal with that dealer group or adviser again. Ask the adviser to give a comparison against cheaper master trusts such as Australian Skandia Wholesale Slutions, Credit Suisse MasterWrap and Macquarie Investment Manager etc. These platforms have fees well under 1%pa, if the adviser is recommending something that costs more than that make sure there are clear reasons for doing so.
• When you get the plan, is the advice clear? Does it include a list of actions that need to be taken and an explanation of who needs to do it? Is there a clear advantage to going with the recommendations and does the adviser explicitly define what those benefits will be?

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