How do I find a Financial Advisor?

How do I find a Financial Advisor?

I was headed away for a long journey this week and my service on my car was overdue. To tide me over until I returned I popped into my awesome local mechanic and he check my ‘levels’ and I hit the road. My parents needed a hot water gas unit installed so I organised a qualified plumber and the job was complete in a morning. My phone was playing up so I called in to Vodafone and they fixed it. I want to make a million bucks, I should call someone qualified and financially literate right, an Authorised Financial Advisor perhaps? Ahhh, yeah I should!

When it was decided that my now husband and I were two peas in a pod we started buying things together and splitting the costs down the centre. Exciting things like vacuum cleaners and dinner sets (I knew he was a keeper when he actually used the vacuum cleaner). It was getting complicated at the grocery store checkout paying half each as neither of our maths was up to it. It became a logical thing to lump all of our money together and that is what we did from very early on. The one thing that remained purely his however was a Managed Fund that his VERY wise mother had encouraged him to set up with a financial advisor and he had been paying into it for years. When the time came to buy a house it seemed very logical that we should use this lump sum as a deposit.

We visited the firm that had managed his money and I was introduced to an entirely new to me job classification: Authorised Financial Advisor (AFA). A nice man, he had my husbands back by politely questioning why he was withdrawing all of his money as the fund was performing so well. He pointed out that things were tracking along nicely until this new woman of yours turned up...

Long story short the fund was closed and that gave us the deposit we needed on our house. A key tip in my investing has always been that you (generally) can’t make money while you owe money. Yes, the fund was performing well but we paid our house of years faster by using that money.

So, it was with this experience in mind that many years later I thought my investing had reached the point that I needed a financial advisor to give us a bit of direction. The very financially wise Mary Holm made the comment that as New Zealanders are relatively new to investing they will reach a point where they build up enough savings that one day they will actively sit up and take notice. That day had come.

Finding an AFA was not easy and my internet search lead to a lot of dead ends. Every site tells you what to look for in an advisor: Code of ethics, pay structures, certification, short to long term goals. Do you want an Authorised Financial Adviser, a Registered Financial Adviser or a Qualifying Financial Entity advisor (what the??). I went to the Companies Office Financial Service Providers Register but this was like the ambulance at the bottom on the cliff. You could only check out an advisor once you had found one. I asked a few friends but they could not help me.

So, many mouse clicks later, I eventually tracked one down in my town and with excitement I had a meeting with him. He was located in a nice office with enough people in it to need a receptionist. They must be busy. Good start.

He took me to an office which was full of boxes and junky office stuff. Not feeling the love quite so much now.

After the pleasantries were out of the way he got out a pen and paper and asked me questions only about how much debt we had.

“None” I replied.

“REALLY!” was his surprised response. I do understand it was a good question to ask but he just kept going on about it and it took him ages to change his line of questioning.

We went over what we had managed to save so far and he asked some vague questions about my risk profile. Was I high, medium or low risk? Yawn.

Meeting closed and he said he would come back to me with a financial plan so cunning you could put a tail on it and call it a donkey. Ok, maybe he just said he would come back with some good ideas.

Two weeks went by and I came back to his office to hear about exactly how he could help us do things better. I was quite excited to hear all this.

He had (I kid you not) scribbled on a piece of paper three scenarios of saving for retirement. I had the distinct feeling that the ink was not quite dry on this master plan, him having just written it as I came up the stairs.

Listen up reader, the scenarios were as follows:

Easy, medium and hard. I could either save $5,000, $40,000 or $100,000 a year. I’ve been in sales long enough to recognise a stretch goal when I see it.

Really, you had two weeks and that is it? I thought I would at least give him the benefit of the doubt here so he quickly explained each one. As you could probably figure out the Easy was too easy and the Hard was unattainable. I had lost all interest when he got to the medium.

Absolutely NO mention of any place to actually put any of this money i.e. shares, bank, under my mattress. Who knows?

I was pretty annoyed so I asked HIM a question or two.

“How long have you been doing this?” “About eight years.”

“Are you wealthy?” “What, why, mumble mumble, well no, I have debt like every other Kiwi of course.”

Not this Kiwi I thought. Thanks for your time and for wasting mine. See you later!

Now I’m really annoyed that I threw his “financial plan” in the bin, I would so loved to have shown you all! Just get your five year old to draw you something, it will be similar.

This reminded me of another financial tip I would like to share. In my experience I have always found it useful to remember to never take financial advice off people who have no money themselves. This whole experience left me so disappointed.

So, what is a AFA actually meant to do?

An authorised financial advisor is an excellent place for someone new to investing to make a start. The benefit of having a chat with someone who knows about this stuff can save you a lot of money in the long run because you will be educated about investment options and guided down the path.

An AFA has qualifications in giving financial advice and will give advice about financial planning, investing, insurance and other services such as estate planning. They will help you work out your short to long term financial goals and provide you with a well researched and explained investment strategy to achieve those goals. They will then review your plans and stay in touch with how things are performing, changes that need to be made etc.

Some are given commission by the product supplier and others charge an hourly rate. General consensus is that those given commission are then biased towards selling those products which may in turn not give you the best advice and that hourly rates/fees are better as you will be shown a wider pool of products. Whomever you use they need to be clear about their rates up front.

The government has announced a review of the Financial Advisors Act 2008 and are looking for opportunities to make it better and more transparent. The fact that every piece of information I read about advisors very quickly points me to their dispute resolution process tells me that there must be some under qualified (such as the ‘advisor’ I met), unscrupulous types around which is alarming to say the least. From what I understand my mechanic and plumber that I referred to at the beginning have more qualifications under their belts than some people trying to give advice.

I found this good link about questions I could ask my advisor and it clearly states who is qualified to do what.

However, this story on financial advisors does have a happy ending. I found one! A family member who I know and trust has used a financial advisor for many years and on their recommendation I approached him. They started with nothing and took advice early on. They strongly believe that they would not be in the position they are today without doing it. Don’t get me wrong, they still would have saved but they saved in ‘the right places’ with professional help.

I got in touch and laid out to him in an email everything that we had saved and asked his advice on whether or not we should change anything. Over email and phone he asked me a lot of questions in order to gain an understanding of where we were at and where we were trying to get to. He constructed a variety of options for me and in plain English explained to me on the pros and cons of each. He would have clients worth squillions but he really took the time to understand our situation which I really appreciated. Over the course of a couple of weeks emails went back and forth, forms were filled out and he just generally steered me through the paperwork.

He charges fees and so he should, they must have been small as I can’t recall what they were! I valued the advice he gave and consider my financial well being a good investment. So, now I have a few more tabs in my investment folder and they just quietly tick away. I add money to them monthly and let compounding interest work its magic.

So, my gift to you today is the following. A magical link to a real Authorised Financial Advisor. And NO I am not being paid for giving his details! Consider this a good place to start if you are looking for an AFA.

You can find Pat here:

Happy Saving!



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