Legal Brief with Alan Tate of Harris Tate www.harristate.co.nz

Until recently, anyone could set up in business as a financial adviser or to sell investments or other financial products. That lack of regulation was a major cause of people, particularly the elderly, being talked into investments such as Blue Chip, which have resulted in financial disaster for many.

A new regime has been established to regulate financial advisers, to lift professional standards and to rebuild public confidence in the investment process.

The key changes are:

• All financial advisers will have to act with care, diligence and skill.
• All financial advisers will have to be publicly registered and belong to a dispute resolution scheme.
• Financial advisers will have to be individually authorised by the Securities Commission to give personalised investment advice to retail clients.

Advisers who are authorised by the Securities Commission must meet minimum standards of confidence, knowledge and skills, client care, ethical behaviour and undertake continuing professional training.

Questions to ask in selecting a financial adviser are:

• Who is the adviser? Do they belong to a professional adviser association? What qualifications and experience do they have? Do they work for themselves or an organisation?
• How is the adviser paid? Will you be charged fees? Will commissions be deducted from the money you invest? Can the adviser tell you what the maximum is that you will pay, directly or indirectly, for the advice? Will the adviser get any other form of payment or remuneration from the organisation your funds are invested with?
• What services does your adviser offer? Does your adviser specialise in offering the products and services you are looking for? Has the adviser asked you questions that make you comfortable? Do they properly understand your needs? Will the adviser put details of the advice and answers to your questions in writing to you?

Answers to these questions will help you decide if the adviser has the skills and experience necessary to assist you.