What does a Financial Adviser do

If want to know what does a Financial Adviser do, there can be a range of answers because the use of the term financial adviser is broad, and was defined under the new government rules and regulation.

Financial Advisers work in three categories which are insurance, investments and finance. Some advisers will provide all types of services such as Mortgage Finance, Personal Insurance such as Life Insurance and KiwiSaver while some will just provide service in one category such as Mortgage Finance.

Financial Adviser Qualifications

Financial Advisers are governed by the Financial Markets Authority (FMA) who hold advisers to a high standard of education, qualification and behaviour, so you should not have any concerns about the competency of using a financial adviser.

Should you use an adviser who specialises in only one area or should you use an adviser who provides a full range of services? This should not make any difference because advisers must hold qualifications in the area they are giving advice about. You would not be advantaged or disadvantaged, no matter who you choose as your adviser.

Financial Advice Provider (FAP)

The financial markets keeps evolving to hold advisers to a higher standard and therefore better outcomes for consumers. The recent changes require advisers to change from being a Registered Financial Adviser to being a registered Financial Advice Provider, or to be a member of a Financial Advice Provider.

The question about what does a financial adviser do? should be more of what type of service and advice do you need.

Six Step Advice Process

There is a six step process an adviser should use when providing advice and implementing that advice for you which are as follows.

Step 1: Complete a Scope of Service/Terms of Engagement

After discussion with you, this will be a document your adviser will provide to you which will outline what the adviser will do for you and also bring to your attention what may not be included in the service provided.

Step 2: Fact Find

After agreeing to your Scope of Service, the adviser will begin the Fact Find process to gather all the information they need to give you the best advice. It is in your best interest to tell your adviser everything they need to know because the advice you get, will be based on the information and answers you give.

Step 3: Research

After completing a Fact Find, your adviser will review the information and in consideration of your objectives and Scope of Service and how best to achieve your desired requirements/outcomes.

Step 4: Prepare a Personal Statement of Advice

After completing the research process, your adviser will prepare a Statement of Advice document which provides written advice, their rationale, recommendation, costs (if any) and next steps.

Step 5: Presentation and Implementation

After preparing your personal Statement of Advice, your adviser will present it to you, and if required make any variations to that advice based on your feedback, then implement that advice such as arrange the necessary insurance, finance or investments outlined in the Statement of Advice.

Step 6: Review and Monitor

Finally, you should set agreed times that you will review your requirements to ensure they are in line with your current needs and objectives. Life always changes so it is important to regularly review your financial objectives.