Don’t pay more than that - preferably less. The Smart Investor tool on shows the average fee on non-KiwiSaver funds is around 1.5%, and on KiwiSaver funds it is lower. Research repeatedly shows that high-fee funds don’t necessarily bring higher returns. As well as paying for advice, you will pay fees charged by the funds you invest in - which will be subtracted from the returns you make.Confirm that the adviser does not receive any commissions.
In most cases, you will invest in funds, and you shouldn’t need to invest in more than three or four diversified funds at different risk levels. Is what they are proposing fairly simple? I’ve seen some ridiculously complicated plans, which I suspect are used to justify high fees.Do you understand what the adviser is telling you? If you’ve read “Rich Enough?” you should be able to follow what they are saying.
Interview the advisers as if you are hiring them for a job - which is what you are doing! You should be in charge, not them.
Awkward conversations about money audio free free#
When you have a few “finalists”, ask to set up a free first meeting, or at least a free phone conversation.
If they don’t reply promptly, give them a miss. Then email them, briefly outlining your situation and asking how they could help you. If that’s not clear on their website, move on.įind several advisers whose approaches appeal to you. “It’s a good idea to ask your adviser for examples of how they’ve successfully helped people similar to you.”Ī good first step is reading the websites of advisers who operate near you - including advisers who say they are willing to travel to your area. Often this isn’t clear until years after the advice has been given. It’s not wise to choose an adviser based largely on recommendations from friends or family.Īs the FMA puts it, “Your friend or family member is likely to have different financial objectives to you, and if they’ve only recently taken advice, it’s hard to tell whether an adviser has done a good job. (If this or any other question feels awkward to ask, say Mary told you to!) Choosing an adviser A good adviser should be happy to explain how they monitor. Some advisers who charge ongoing “monitoring” fees don’t seem to do much for that money. Discuss with a potential adviser how they charge and why. But some advisers put up good arguments for percentage fees. Generally, I think hourly or fixed fees are preferable. Of the advisers who charge a fee, some charge by the hour while others charge a fixed fee and/or a percentage of the money you invest with them. If, instead, the adviser is paid by commission from a provider of financial products, they will be incentivised to receive the highest commission, rather than putting you in products that are best for you. I strongly recommend using an adviser who charges you a fee - just as a lawyer or accountant would. “You might also pay an ongoing fee - Some advisers are paid a ‘trail commission’ where money is paid to them by a supplier of a product, for the duration of the relationship.” You pay nothing upfront for this, but you should know this and recognise that you may be offered a limited choice of options from only one provider. “ Indirectly - the adviser is paid a commission from the providers whose product you sign up to. “ Directly - via a fee for the service the adviser has provided, or: “Generally, advisers are paid for advice in two ways: On the page called “Paying for financial advice” the FMA says: Note the page called “Finding a Financial Adviser”, and use the suggested questions in your search. I strongly recommend that anyone thinking of using the services of a financial adviser reads what the FMA says here. How financial advice is regulatedįinancial advice is regulated by the Financial Markets Authority (FMA). If you still think you need financial advice, reading the book will leave you much better placed to understand what your adviser is doing. I think some people in the financial world make it seem more complicated than it is, in the hopes you will use their services. In many cases, it will give you enough information to run your own finances simply and well. This book is pitched at New Zealanders with no financial knowledge. Before you search for a financial adviser, I suggest you read my book Rich Enough? A Laid-back Guide for Every Kiwi, which you can buy at a discount here.
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