LEARN MORE ABOUT FINANCIAL PLANNING

What is a financial adviser?

  • A financial adviser is a professional person, expert in helping you design your financial plan and providing you with financial advice.
  • Financial advisers must either be licensed or an authorised representative of a licensee.
  • Financial planners and financial advisers are the same, and the terms can be used interchangeably. In this guide, we generally call them financial advisers.

A financial adviser is a highly trained professional with the necessary expertise to help you develop your financial plan and provide you with financial advice.

what is a financial adviser

Terminology

As mentioned, financial advisers are sometimes referred to as 'financial planners'. In this guide, we will use the term 'financial adviser'.

You might seek the services of a financial adviser who works for a financial institution and is paid a salary, or you may seek advice from a self-employed adviser or advice firm that may or may not have connections with certain financial product providers.

Tip

It's important to ask your financial adviser if they have any associations with financial product providers and the nature of their fee structure.

Financial adviser boundaries

It's important to know what financial advisers can and cannot do, and how they fit into the financial planning process.

Note: A financial adviser must hold an Australian financial services (AFS) licence or be an authorised representative of an AFS licensee. That is, operate under a licensee's umbrella, in order to practise. They may also have other credentials depending on the types of services they provide.

For more information, see the Do financial advisers need to be licensed? section of this guide.

Financial advice versus financial counselling: Which is right for you?

Financial advisers and financial counsellors may appear similar, however, they are poles apart in terms of expertise, what they do and whom they see.

Financial counselling is a free service for people having trouble managing their debts, meeting ongoing daily-living expenses and getting their finances under control. At a 'grass roots' level, financial counsellors help look after disadvantaged groups experiencing financial hardship.

It is funded by the federal and state governments and available through community organisations, charities and some government agencies. It does not cover legal, product or investment advice.

This contrasts with financial advice which is about wealth creation strategies and achieving financial goals in areas such as investing, retirement planning, estate planning and superannuation.

Financial counsellors are highly adept listeners who provide advice, empathy and support to people in dire financial situations. They may also look at wider contributing factors such as health, relationships, abuse, housing and employment.

What services does a financial counsellor provide?

Upon assessing your financial situation, a financial counsellor can:

  • play an advocacy, negotiation and intermediary role with creditors, debt collectors, government agencies and utility providers
  • assist with preparing a workable budget/plan to manage your money
  • help prioritise your debts
  • lodge a complaint with an external dispute resolution (EDR) scheme on your behalf
  • refer you to other services such as legal aid, accommodation, gambling counselling, health and crisis services
  • advise you on your financial options, the pros and cons, rights and responsibilities
  • help you access government assistance, such as social security, and concessions
  • educate you on credit, bankruptcy, insolvency and debt collection laws and processes.

Unlike for financial advice, you should never pay for financial counselling services. While the requirement to hold an Australian financial services (AFS) licence does not apply to financial counsellors, they must meet stringent conditions imposed by ASIC to provide financial counselling, for example, not charging fees or accepting payments and commissions from third-parties. They also have to be a member of Financial Counselling Australia (financialcounsellingaustralia.org.au).

In some instances, financial counsellors may be ex-financial advisers.

The National Debt Helpline (ndh.org.au) is a good source of information on financial counselling and how to access it.

 What is digital advice?
 What can a financial adviser do for you?