How to find a financial adviser you can actually trust

The royal commission has made many Aussies cynical about getting financial advice.

The most important step in finding a financial adviser you can trust is to remove any conflicts of interest. To be truly independent I believe the adviser needs to satisfy five conditions:

Take no commissions, referral fees or kickbacks

This ensures they are impartial and have no personal stake in the advice outcome. They shouldn't make any more or less money (fees/revenue) based on their recommendations.

Offer fixed fees

A financial adviser should not charge you a percentage fee on your investments because this creates a conflict too.

They should charge you a fixed monthly, quarterly or annual fee for their service (or an hourly rate is fine too).

Have nothing to sell you

The adviser's business shouldn't make money from selling investments. The best case is that the adviser's business has nothing to sell you.

They don't operate their own managed funds (shares), recommend direct shares (like a stockbroker) or buy/recommend specific properties (through a buyer's agent). And they definitely have no links with property developers!

Be privately owned with an Australian Financial Services Licence

They should have no links to banks or investment providers. It is important that the licence owner is an independent and privately owned business.

If the AFSL owner is a bank, for example, the adviser might only be allowed to sell bank-owned products (or have a very narrow list of other products).

Demonstrate deep knowledge of all asset classes, especially property and shares

It is important that an adviser has a robust understanding of how to invest successfully using any and all asset classes.

The main asset classes in Australia are residential and commercial property, shares/equities, bonds and cash.

However, some financial planners know very little about investing in residential property. My view is that a financial adviser should know both property and shares equally well to be able to reach a reliable conclusion.

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