One of the most important aspects of a financial adviser's job is to identify your personal and financial goals and objectives. A good financial adviser will try to collect as much information about you as possible in order to identify what matters to you.
They should also work with you to identify and clearly explain suitable strategies that can help you achieve your financial goals, including the costs involved. However, it is important that you understand the strategies before you commit to any recommendations.
The buck stop with youYour financial adviser's job is to work with you to prepare a financial plan and make recommendations to you about where to place your money. But they are just an adviser. You are the one making the final decisions. If anything goes wrong, your financial adviser's lawyers will remind you that any investment decisions were yours. |
A good financial adviser will always speak to you about your risk tolerance and base their recommendations on these findings. However, it is important to remember that your risk profile changes over time with different life stages.
ExampleIf you are approaching retirement where it usually becomes more important to protect your money, your financial adviser should be considering increasing your exposure to lower-risk investments, such as cash and fixed income, and reducing your exposure to high-risk investments, such as shares and borrowing to invest. |
If you have an ongoing relationship with a good financial adviser, they will continually monitor your risk profile and ensure your investments are still suitable.
For a detailed discussion on risk, see the Understanding risk section of this guide.
Alarm bells should sound if an adviser is pressuring you to invest in something outside your risk profile, which you are not comfortable with and do not fully understand. A good financial adviser will not pressure you to invest in a product or take on more risk than you are willing to.
Signs you're working with a bad financial adviser
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A good financial adviser | A bad financial adviser |
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Is it worth paying for financial advice? |
How to find a good financial adviser |