Who Needs a Financial Advisor?

You need a lawyer, right?  And an accountant.  But... do you need a financial advisor?  Like many people (most, in fact) you probably feel that a financial advisor is a bit of an optional extra.  We strongly feel that this is not sound thinking. Why?  Well, you surround yourself with experts in their fields, experts in law, accounting, insurance, banking... why wouldn't you want a finance expert as well?

My lawyer/accountant/banker gives me financial advice
Really? If this is your situation, you really need to ask yourself: "Why?"  You see, accountants aren't trained to offer financial advice. Neither are lawyers, or bankers.  The only people who are (in our opinion) are financial advisors.  

So what is a financial advisor then?
Well, the answer is sort of boring, so we explain that at the end of this blog post. We recommend that you deal with an AFA wherever possible, as they've had to jump through all sorts of hoops to get their qualification.

Um... so why do I need to talk to them?
Well, everyone will try to tell you what to do with your money (shares, housing, securities, bonds etc etc), but how do you know what's right? This is where an AFA adds value.  A good financial advisor will gather info on your present financial situation, your goals, how risk averse you are and your family circumstances. They'l then collate that, and make recommendations about how to get the most out of life. That might include managing your money better, reducing debt, savings/investment advice, estate planning etc.

So when should I talk to one of these AFAs?
Now! See below for some names, or do a Google search.

The 3 types of financial advisors:
There are three varieties. RFAs, AFAs and those who work for a QFE.

RFA  -  A Registered Financial Adviser is an adviser who is qualified to give advice on simpler products; such as mortgages, life insurance, risk insurance, call debt securities, bank term deposits, consumer credit contracts, and insurance. They must be registered with the Financial Markets Authority (FMA) but don't have to pass any exams. 

AFA - To be an AFA (Authorised Financial Advisor) you have to meet standards of care, diligence and disclosure. They are also required to be registered and belong to a dispute resolution scheme. An AFA can give advice on more complex financial products and services; such as Kiwisaver, investment, financial planning services including securities, any estate or interest in land and futures contracts, retirement planning services, and wealth management.  AFAs have higher standards than RFAs in terms of disclosure and monitoring by the FMA.  All AFAs are required to comply with a Code of Professional Conduct and meet minimum standards for competence, knowledge and skills, client care, ethical behaviour and ongoing professional training.  All AFAs have been through a rigorous examination process to gain a qualification that sets them apart from RFAs 

QFE -  Financial advisers employed by companies that have been granted status as a Qualifying Financial Entity (QFE) by the Securities Commission will not need to be individually registered or authorised if they only provide advice only on their QFE’s own products. The QFE must ensure that its employees and nominated representatives have the competence necessary to exercise reasonable care, diligence and skill in advising clients.  A typical QFE would be a bank or insurance company.

Acknowledgements
We'd like to acknowledge the following sources of information, which were consulted in this post:
Goodlife Financial Advice
Iconic Financial Limited
Moneymax.co.nz
Money Planners

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