Questions Every Client Should Ask Before Accepting Financial Advice

Why Asking Questions Matters

Financial advice is a professional service that can have a significant impact on your financial future. Asking the right questions before accepting advice helps you understand what you are getting what it will cost and whether the adviser is right for you.

Questions About Fees and Costs

How much will this advice cost? Are there any ongoing fees? Do you receive any commissions or benefits from the products you recommend? These questions help you understand the total cost of the advice and whether there are any conflicts of interest.

Questions About the Advice Itself

What alternatives did you consider? Why is this recommendation better than the others? How does it align with my risk profile and goals? These questions help you assess whether the advice is truly suitable for your circumstances.

Questions About Documentation

What will my Statement of Advice include? When will I receive it? What if I change my mind after receiving it? Understanding these practical aspects helps you know what to expect and what your rights are after receiving the advice.

Key Questions About the Recommendation

Before accepting any financial advice, you should understand exactly what is being recommended and why. Start with: "How does this recommendation align with my specific goals?" Your adviser should be able to connect each recommendation to a goal you have discussed, such as retiring at a certain age, buying a home, or funding your children's education.

Next, ask: "What alternatives did you consider and why did you choose this one?" Under the best interests duty (s961B), your adviser must consider alternatives and document their reasoning. If they cannot explain why other options were rejected, the advice may not have been sufficiently thorough. A good adviser will welcome these questions and provide clear, detailed answers.

Questions About Fees and Costs

Fee transparency is critical. Ask: "What are all the fees I will pay in dollar terms?" This includes the advice fee, product fees, ongoing fees, and any commissions. Request a total cost projection over 1 year, 5 years, and 10 years. Ask: "Are there any commissions or benefits you or your licensee receive from this recommendation?" Even if commissions appear to be banned under FOFA, some exceptions exist (such as life insurance commissions), and they must be disclosed.

Also ask: "What happens if I want to stop the ongoing service arrangement?" You have the right to terminate ongoing fee arrangements at any time. Your adviser should explain how to do this and whether there are any penalties or costs for terminating early. If the fees are being deducted from your super, ask how this affects your retirement balance over time.

Questions About Risks and Your Rights

Every financial product carries some level of risk. Ask: "What are the specific risks of this recommendation, and what could go wrong?" Your adviser should explain not just the potential benefits but also the downside scenarios, including what would happen if investment markets perform poorly or if your personal circumstances change.

Finally, ask about your rights: "What is the complaints process if I am not satisfied?" and "Can I get a cooling-off period?" For many financial products, you have a 14-day cooling-off period during which you can cancel without penalty. Understanding your rights before signing gives you confidence and protection. If your adviser is reluctant to answer these questions, consider it a red flag.

Frequently Asked Questions

Should I ask these questions before or after receiving the SOA?
Ask them during your initial meetings and again when you receive the SOA. The SOA should answer most of these questions in writing. If it does not, use these questions as the basis for requesting clarifications or amendments before signing.

What if my adviser seems annoyed by my questions?
A professional adviser should welcome your questions and provide clear answers. If your adviser is dismissive or impatient, this is a red flag. You are entitled to understand the advice you are paying for. Consider seeking a second opinion from another adviser.

How long should I take to review an SOA before signing?
Take as long as you need. A good SOA is a detailed document that requires careful reading. Most advisers expect you to take at least a few days to review it. If you feel rushed or pressured to sign quickly, take a step back. Under the law, you must give informed consent, which requires time to consider the advice.

Can I get a second opinion on financial advice?
Yes, absolutely. Many financial advisers offer fixed-fee second opinion services. You can also use digital tools like AdviserCheck to analyse the document. Seeking a second opinion is a responsible step, not a sign of distrust.