Did you know: financial advisers come in all shapes and sizes?
Financial advisers come in all shapes and sizes. So what makes them different and how do you choose who can best help you?
You can think of insurers like Fidelity Life as a manufacturer, and advisers as the retail store stocking a number of different brands. We try hard to design a brilliant product to meet your needs and lifestyle – but we still recommend that you speak to a financial adviser who knows all the different products. They can provide perspective on what’s best for your situation and financial goals.
Some advisers specialise in specific products – insurance or mortgages, for example. Others can take a more comprehensive look at your finances and help shape a complete financial plan with you.
In each case, it’s important to check what type of advice you’re getting. Is your adviser registered, authorised or simply selling one bank or other company’s products? There’s a big difference between the three.
Advisers have to be one of the following:
Registered Financial Advisers (RFAs)
A registered financial adviser or RFA is qualified to give advice on products such as mortgages, life insurance and other insurance products. They are required to be registered but not authorised. Registration means that a financial service provider has met certain requirements including passing criminal history checks. Some RFAs will work with a collection of providers, others for just one company.
Authorised Financial Adviser (AFAs)
An authorised financial adviser or AFA can give advice on a wider range of financial products and services such as Kiwisaver, investments, retirement planning and wealth management. AFAs have been through an examination process and must meet minimum standards for competence, knowledge, client care, ethical behaviour and ongoing professional training.
Advisers working for Qualifying Financial Entities (QFEs)
Financial advisers employed by, or acting as nominated representatives of companies that have been granted QFE status, such as a bank, do not need to be individually registered or authorised as long as they only provide advice on the QFE’s own products. The QFE must ensure that its employees and nominated representatives have the competence necessary to exercise reasonable care, diligence and skill in advising clients.
Choosing an adviser
Before choosing any adviser, you can check they or the QFE are registered on the Financial Service Providers Register (FSPR). This is a searchable online register of people, businesses and organisations that offer financial services. Any adviser should be able to tell you their FSP registration number. The FSPR will also show if they are authorised as an AFA to provide more specialised financial or investment advice.
The Financial Markets Authority (FMA) is the main regulator of financial advisers in New Zealand and the Financial Advisers Act (FAA) makes advisers accountable for the advice they give. Under the Act all financial advisers must meet standards of care, diligence and disclosure. The adviser (or their QFE) is also required to be registered and belong to a dispute resolution service.
All financial advisers must disclose certain information about the services they provide in a disclosure statement. The information the disclosure statement must contain depends on the type of adviser.
AFAs and RFAs must give you their disclosure statements. An adviser should make this statement available to you without being prompted to do so, before offering any advice.
As well as this, AFAs must make you aware of the fees they charge, what commission or other incentives they receive, and anything else that might influence the advice they give and the products they recommend.
For further information about choosing an adviser download the brochure 5 questions to ask your financial adviser at https://fma.govt.nz/assets/Brochure/150115-brochure-5-questions-to-ask-your-financial-adviser.pdf