Financial advisers come in many different forms and take on many different names such as financial consultants, investment consultants and wealth managers. But behind all these facades, there are a few honest soldiers. In order to help customers differentiate between the good financial advisers and the bad, here are 5 questions to determine whether a financial adviser in Australia is legitimate or not.
- Have you been registered as an investment advisor?
This question is the first line of defense to determine whether a customer is dealing with a fraud of not. If they reply that they are not registered, it proves the illegitimacy of their services and it would be safer for the customer to wave goodbye and walk away. However, if they reply that they are indeed registered, then there is another question that needs to asked and if that is if they are an independent registered investment advisor or not.
- Are you affiliated with a broker or a dealer?
This question, although quite direct, needs to be answered honestly by the financial advisor to provide services to the clients. If they reply that they are a broker or a dealer, it gives them the right to push customer money into specific investments, which can work against the customer’s best interests.
- Do you also offer mutual fund accounts?
If the answer to this question is a yes, it implies that the adviser may be obligated to rope customers into these additional schemes that may just profit them, but not directly help the clients in any way.
- What are your views on investments?
By answering this question, the customers will be able to get a deeper understanding of the adviser’s mentality. If the adviser is a financial adviser in Australia, and they are legitimate in their work, they will suggest strategies to beat the Australian market and come out on top.
- Where will my money be located?
By asking this question, the customers can ultimately distinguish between the frauds and the honest samaritans. If they suggest holding the money using third-party custodians, it suggests that they are legitimate. This is also beneficial for the customer as they can fire financial advisers at will without having to worry about changing account details.