Financial advice is a risky purchase for most people. It feels risky because of what economists call ‘information asymmetry’.  There’s a power imbalance that results from the difference between what your financial adviser knows and what you know.  

It’s really hard for everyday people to judge the quality of advice.  It’s similar to the risk you take when you’re in the market to buy a used car.  The seller knows way more about the car than you do. And you, as the buyer, are left to look for signals to assess the car’s quality.  Things like the consistency of the service history, the distance travelled, and the reputation of the manufacturer.  

It’s why second-hand Toyotas have higher resale values than SsangYongs. 

But that’s where the analogy ends.  Unfortunately, the stakes are way higher when you’re buying financial planning services than when you’re buying a used car.  As we’ve seen over and over again, if things go wrong with financial advice, they can go really wrong, leaving you destitute and vulnerable.

So, here’s our attempt to reduce the information asymmetry.  We want to empower you to recognize the signs of quality advice, so that you can have more confidence with your finances and make better decisions.

1. Your adviser is keen to serve you

According to research, the typical financial adviser personally manages fewer than 200 clients.  That means that they can meet with on average four clients each week if they provide an annual service.  It’s easy to find time to meet with you when you need help.

So, if you’re required to wait up to a fortnight or longer to meet with your adviser then there’s something wrong.  Maybe your adviser is spread too thin trying to service too many clients, or they’re not serious about actively serving their clients. Either way, it’s the first sign of poor-quality advice and you deserve better.  

2. Your adviser has neutralized conflicts

Historically, most financial advisers have simply been sales intermediaries of financial institutions trying to distribute their products.

That’s changing, but bad practices still abound.  Here’s the test: Is your adviser employed by a financial product provider?  Does the practice receive asset-based fees calculated on the amount of money you have to invest?  Do you pay different advice fees depending on what financial strategy is recommended (eg, reducing debt versus investing)?  If the answer is yes to any of these questions, then your adviser is choosing to work in a conflicted way and you deserve better.  

3. Your adviser takes the time to explain everything

When it comes to investment, the single most important thing is that you understand your strategy, your investments, and the risks involved.

That’s why it’s so important that your adviser works patiently with you, giving you opportunities to ask questions and really test your understanding.  If the advice process feels in any way rushed, or you’re asked to commit to something before you’re ready, then you deserve better.  

4. Your financial plan has improved your life

According to CoreData research, quality financial advice improves lives.  It means that you are able to spend more, achieve more, and have more wealth with less risk.  

Can your adviser demonstrate that you’re paying less tax, receiving more Social Security benefits, more efficiently allocating your resources and taking less risk because of their strategies?  If they can’t prove it, then you deserve better.

5. Your adviser is experienced and educated

There are two elements to professional competence: experience and education.  Over the next seven years, minimum competence requirements of financial advisers in Australia will increase.  By January 2026, every financial adviser must be degree qualified.

But you don’t need to wait that long.  The peak global hallmark of adviser competence is the CERTIFIED FINANCIAL PLANNER® designation. CFP® Professionals are more than degree qualified, highly experienced, and have signed up for a Code of Professional Conduct.  So, ask your adviser if they’re a CFP® Professional. If they’re not, you deserve better.

Not all financial advisers are the same and not all financial advice is the same.  It’s important to sort the wheat from the chaff.

At When Financial Solutions, we’re self-employed advisers who serve the New England and North West NSW regions.  We’re CFP® Professionals who have worked hard to neutralize our conflicts.  We’re not aligned with any product providers and we charge fixed fees for service.  It means that it’s not a matter of ‘if’ you will receive quality advice from us, but ‘when’.

Michael Bowman and James McMaster are co-founders of When Financial Solutions