How do I submit an offer on a house?
When buying a home it is important to remain rational and to do your homework. A house is worth the maximum......
The basis of all great relationships is trust and it should be no different when dealing with your financial adviser. Building that trust, however, isn’t always easy with the number of laws, regulations and titles given to different types of advisers within New Zealand.
This week we have delved into the details to make it easier for you to understand your adviser and their obligations.
Your adviser or their firm should be registered
In New Zealand, all advisers are regulated by the Financial Markets Authority (FMA). Every business that provides financial services within NZ must be registered on the Financial Service Providers Register (FSPR) before they can legally provide financial services. Many individual advisers may also be required to be registered as well (this is not a requirement for Nominated Representatives or QFE advisers as they will belong to a Qualifying Financial Entity such as FoxPlan).
Those with undischarged bankruptcy, banned directors or with financial crime convictions are unable to register as an adviser.
Click here to check the FSPR.
There are three types of financial advisers within New Zealand and it’s critical to understand the differences between these as it can directly impact the financial advice given to you.
QFE Advisers or Nominated Representatives are a common type of adviser within New Zealand and understanding their alignment is extremely important. If they are aligned only to their own organisation (such as an insurance company or bank), they can only provide products from that single organisation. If the organisation they are aligned to is able to deal with multiple providers, then they will be able to offer a market comparison in their advice.
Our tip when dealing with a QFE Adviser or Nominated Representative is to ask which companies they work with to ensure you are getting multiple options.
Registered Financial Advisers are the most common type of adviser in New Zealand. They can offer products across organisations as well as provide advice on some basic investment products such as KiwiSaver or term deposits. Usually, insurance and mortgage advisers will operate as an RFA.
The third type of adviser is an Authorised Financial Adviser (AFA). These advisers are subject to tougher approval by the FMA and governed by higher levels of competency. AFA’s can deal with multiple providers and provide advice on all types of investment, insurance and other financial products.
A disclosure statement
All advisers must provide you with a disclosure statement which outlines the services they provide. This statement should be provided without asking for it and especially before any advice or financial transaction takes place.
AFA’s will also provide a secondary disclosure statement which outlines what fees they charge, commission or other incentives received and any other circumstances that could influence their advice or recommendations.
How can I vet my adviser?
There are several things you can do before dealing with a financial adviser to help feel at ease about their qualifications and competency:
• Web presence: Does the adviser have a web presence such as LinkedIn, Facebook or Google Maps listing? These platforms allow two-way communication with the public and can make it easier to identify those with issues
• Search for reviews: Check the reviews on these pages. Read the negative and the positive – if there are negative reviews, this may not write them off. Check if they have responded to the criticism and ask whether it is fair criticism in the first place
• Ask for testimonials: Advisers with a track record should have clients that are all too happy to advocate for them
• Ask around: Word of mouth is a very useful tool for evaluating the experiences of others
The above list is by no means exhaustive. The single biggest tip we can impart, however: if you do not feel comfortable with your financial adviser – walk away.
If you would like to arrange a time to discuss your circumstances with one of our financial advisers, please email email@example.com.