Thought Leadership

Smelling a Rat

13 Aug 2019 | Investment

The media has many stories to tell of banks and advisers not acting in their client’s best interests. It is a shame as people who could benefit from planning and Investment advice are understandably reluctant to trust those who can help improve their financial future. Here’s a few ideas you can use to help increase confidence.

Before deciding on a Financial adviser, meet with at least two or three advisers and treat it like a job Interview, prepare your questions and ask the same ones of each adviser. Take time to research prospective advisers and check that they are registered ( Talk to your accountant or lawyer, chances are they will have some knowledge and an opinion. If friends and relations have an adviser, ask them if they would recommend their adviser and why.

Modern Investment businesses use a third-party custodian to manage your investments. A custodian is independent from the adviser and holds the assets on your behalf in bare trust structure.

Your money is deposited into an account with the custodian and is held in your name. Your bank account is set up by the Custodian directly not through the adviser. The adviser can only action a transfer of money from your account to your bank account or another account you set up.

Platform providers encourage online access so take advantage of this get a password and check your account regularly to confirm investment balances and your investment performance. 

If you’re really concerned about an adviser check with the custodian directly. Question an adviser who requests custody of your money and asks you to make a cheque out or make an online deposit to their personal bank account or in the name of a company.

Don’t be afraid to ask questions and listen to your gut. A person who is dishonest may well make you feel stupid for asking questions. If in doubt get a second opinion ring another advisory firm, contact Financial Advice NZ or the Financial Markets Authority

Eventually, the dishonest are found out because someone smells a rat but sadly its often too late and by then retirement nest eggs are smashed.