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A Financial Adviser’s primary role is to provide us with a service that will assist us in making sound financial decisions. There are three differing levels of Financial Advisers:

1. Registered Financial Advisor (RFA)

They will offer you tailored guidance on a wide range of simpler financial products available in the market.

2. Authorised Financial Advisor (AFA)

Who can provide you with advice on more complex offerings, tailored specifically to your situation.

3. Qualifying Financial Entity (QFE) Advisor

These are employees of Companies or Banks which provide advice on simpler and in some instances more complex products that their employer (the QFE) provides.

The Pros

They are competent

Providing advice is what they do on a daily basis and they have a wealth of knowledge and experience. Advisors are regulated in some manner and must belong to a disputes resolution scheme. AFA’s are also required to go through a substantial qualification process, and as such are expected to comply with higher competence and behavioural standards.

Advisors are also regulated and must belong to a disputes resolution scheme. AFAs are also required to go through a substantial qualification process and are expected to comply with higher competence and behavioural standards.

Free or low cost

Typically, Financial Advisors are free or low cost. RFAs and AFAs will likely receive a commission from companies where they place their business or an incentive that may differ between companies. This could, however, lead to some form of bias. This may be good but consider how does this affects the service they provide.

On the other end of the scale, there are some Financial Advisors (predominantly AFAs) who will pass on the commission and invoice you instead. While this in theory does remove the bias, there are often some exceptions to what this will apply to.

The Cons

Trust and Comfort

It can be difficult to build trust and be comfortable to discuss your financial position in detail, let alone, be open to taking their advice. This usually happens at the start of the relationship but will get easier when you get to know your Adviser better.

Need for different advisers

Advisors are often specialists. Because there is a broad range of variables that affect your financial life, this could lead to needing different advisers. You may even have to relay your information to each and get advice separately.

It is common for Advisors to only work with selected companies. In the case of a QFE Advisor, they typically have limited knowledge and often present a bias of their own version.

It wouldn't be wise to think that any Advisor (specialist or not) is well educated in every single financial situation.

No guarantees

Despite their experience and knowledge, things don’t always work out as planned. The reality is there is no guarantee that an Adviser will improve your financial position.

What to Expect

A good Financial Adviser will ask a lot of questions to get a full understanding of you and your situation before giving any advice. This includes some form of contingency for any changes in your circumstances. They will discuss what they do and how they could potentially assist you. While this may cost you time, it is a good way to ensure you get the Adviser that is right for you.

Remember that you are not obligated to have one. But, if you find one who is the right fit, who you can trust and be comfortable to discuss all aspects of your financial situation, then you may be on your way to improving your financial situation.

About the author

Tracey Munns is the Co-founder and CEO of VerdiPlus and a specialist in personal wealth creation. She is an engaging energetic business person widely experienced in aspects of the financial services industry. Tracey holds a Bachelor of Commerce, is a Registered Financial Adviser and a noted businesswoman and public speaker. Her passion is to help as many people as she can to 'love their finances and change their lives'

Get Financial Advice

If you are a VerdiPlus member, you can share your financial information with any of your chosen Advisers. If you don’t have one and would like to speak with one, VerdiPlus will also refer you to a fully independent RFA or AFA.