If you use an adviser, check them thoroughly to make sure they're up to the task of looking after your money

Reduce your risk

Financial advisers

If you use an adviser, check them thoroughly to make sure they're up to the task of looking after your money.

Qualities to look for in an adviser are:

  • knowledge
  • experience
  • clearly demonstrated ability to research and analyse investments
  • industry qualifications
  • integrity.

Financial advisers' commissions

Read their disclosure documents carefully to find out whether an adviser charges you an hourly rate for their advice or gets paid a commission on the investments they sell you. An adviser who charges an hourly rate will be more objective and independent than one who gets paid a commission. We think more financial advisers should shift from commissions to charging fees.

Advisers should not only tell you they get incentives to sell certain investment products, they should tell you how much those incentives are.

Questions for your financial adviser

Before investing in a finance company, ask your adviser:

  • How much capital does the finance company have as a percentage of total assets? Is it adequate for the current market conditions?
  • How profitable has the finance company been over time?
  • What is the company's bad debt ratio (percentage of bad debts to total lending)?
  • Does the company have a good "liquidity profile"? A good finance company "borrows long and lends short".
  • How transparent is the company? Who are the directors and senior managers - what is their history?
  • Is your adviser receiving a commission or kickback of any kind from the finance company? Is this commission higher than that received from another similar investment?

Important

Like you, we can't predict the future - which means we can't guarantee the performance of any company or investment. Consumer NZ does not endorse any specific company, scheme or investment. ConsumerSaver is a good starting point - but, before you commit, we strongly suggest you seek independent financial advice. See our full disclaimer.