Independent financial advisers and planners in Australia

What does a financial adviser do?

A financial adviser, or financial planner, is someone who can help you set your financial goals and make a plan to help you achieve them. Financial advisers can typically provide personal financial advice on areas such as investing, superannuation, retirement planning, estate planning, risk management and insurance (e.g. life insurance, Total and Permanent Disability (TPD) insurance and income protection).

Some financial advisers may also be licensed to offer tax advice. Advice can range from one-off advice on a single issue to ongoing advice.

What is an independent financial adviser?

Financial advisers can only legally describe themselves as being ‘independent’ if they don’t receive any commissions (unless rebated in full to their clients), volume-based payments (i.e. payments based on how much business they send to a financial product issuer) or other gifts or benefits from a financial product issuer.

These requirements are set out in the Corporations Act. Due to these rules, a relatively small number of financial advisers in Australia are considered ‘independent’.

It’s worth noting that all financial advisers must have an Australian Financial Services (AFS) licence from the Australian Securities & Investments Commission (ASIC)—the body that regulates financial services in Australia.

Following the Banking Royal Commission, financial advisers are also now required to meet some additional professional standards. This includes having an approved bachelor’s degree as a minimum, sitting an exam set by the Financial Adviser Standards and Ethics Authority (FASEA) and complying with a Code of Ethics that requires them to, for example, act in the best interests of clients and avoid conflicts of interest.

Advisers can also choose to become members of the Profession of Independent Financial Advisers (PIFA) and/or the Certified Independent Financial Advisers Association (CIFAA)—if they meet certain criteria.

To be a Practising Member, PIFA says that advisers must meet the following three criteria. Specifically, they must:

1. Have no ownership links or affiliations with product manufacturers
2. Receive no commissions or incentive payments from product manufacturers
3. Receive no asset-based fees (fees based on the total value of assets in a client’s portfolio).

To be an Associate Member, PIFA says advisers must comply with the legal definition of independence, or be “actively transitioning their practice to become independent”.

In addition to fixed fees, the Federal Government’s Moneysmart website notes that advisers may charge percentage-based fees, such as asset-based fees or fees based on the performance of your investments. However, independent financial advisers who are Practising Members of PIFA are not allowed to charge asset-based fees.

Potential benefits of using an independent financial adviser

One benefit of choosing an independent financial adviser could be the reassurance that the advice given should be impartial and not based on sales incentives.

There are also a number of potential benefits to using a financial adviser in general. For example, they could help you:

• Identify your short, medium and long-term financial goals

• Create practical strategies to help achieve them

• Feel more in control of your finances

• Develop a personalised investment plan

• Protect your assets

• Plan for retirement.

A financial adviser may be particularly useful during big life events, such as if you’re buying your first home, starting a family, inheriting money or approaching retirement. When you reach your preservation age, for example, and decide to access your super, you may like to speak to an independent financial adviser to support you with the financial planning of your future.

Potential disadvantages of using an independent financial adviser

One potential disadvantage of using an independent financial adviser is their relative scarcity.

At the time of writing, there are just over 30 independent financial advisers in Australia who are listed on PIFA’s directory. This may mean you need to travel for a consultation or have over-the-phone or online consultations in some cases. It could also mean fewer advisers that you can compare.

More generally, seeing a financial adviser can be expensive. Not every situation will necessarily call for professional financial advice, so you might want to think about what kind of financial help you need before committing to an adviser. For example, if you’re after financial information rather than advice, it might be useful to talk to your bank, super fund, insurer or other financial institution.

If you want advice on your superannuation, you could also consider getting advice through your super fund. You may be able to get general advice at no additional cost; however, there is typically a fee for more comprehensive, personal advice.

If you need help with debt or other financial problems, you may find talking to a financial counsellor more beneficial. Financial counselling is a free, independent and confidential service. You can speak to a financial counsellor by calling the National Debt Helpline on 1800 007 007 or by visiting their website.

Where can I find independent financial advisers in Australia?

The PIFA has a directory that lists its active Practising Members and Associate Members from across Australia. You can also select your state or territory to help find an independent financial adviser that’s closer to your location. The CIFAA also has a directory that lets you narrow down your search by state or territory. Since both of these professional bodies have similar membership requirements, you may find some financial advisers are members of both.

If you’re unable to find an independent financial adviser, you may instead consider talking to the financial advisers closer to where you live. The Association of Financial Advisers’ (AFA) also has a directory of its members that you may find useful. While its members may follow certain professional guidelines they may not be ‘independent’ in the way described by the PIFA or CIFAA.

This is why it’s worth discussing with a financial adviser about how they are paid (i.e. what fees they charge and how much they are) and if they receive any commissions or bonuses for selling you certain financial products, before engaging their services. Moneysmart also suggests enquiring about their qualifications, speciality areas and who their typical client is.