I have some money I want to invest. What do I need to know?
Does a financial adviser have to be qualified, or can anyone do it?
I have some money I want to invest. What do I need to know?
There are many different ways you can invest your money, including property, the share market, commodities (e.g. gold), interest bearing savings accounts, and term deposits. Most investments will be marketed to you so they seem attractive, but it is important to really understand what it is you are investing in and the risks involved.
A specialist financial adviser can give you information and advice on investments you may be interested in. Financial advisers include financial planners, insurance companies, sharebrokers, banks, asset managers, independent advisers and some lawyers and accountants. You should shop around until you find a financial adviser that you feel comfortable with, who knows about the particular area in which you would like to invest.
If you have some money to invest, Sorted.org.nz is a free advisory service that offers an online guide to investment. It provides information on what types of investment might suit you.
Does a financial adviser have to be qualified, or can anyone do it?
Many organisations have investment advisers who can help you invest your money . These organisations include banks, financial advisers, share brokers, accountants, insurance companies, and some law firms.
Under the Financial Service Providers Act, everyone who provides, or offers to provide, a financial service is required to register on the Financial Service Providers Register (FSPR) as a Financial Service Provider.
The Financial Advisers Act 2008 only allows for certain people to provide financial adviser services and there are different disclosure and conduct requirements according to the complexity of, and risk posed by, the advice given. Financial advisers must be registered by 31 March 2011. From this date, nobody can offer financial advice unless they are on the Financial Service Providers Register or are exempt under the Act.
Under that Act, people who wish to provide advice on securities, futures contracts, or an interest in land, or who provide a financial planning service, are required to be authorised by the Financial Markets Authority and also need to register as a financial service provider.
Those who wish to provide advice on a call debt security, a bank term deposit, an insurance product (excluding a life insurance product issued after 31 December 2008) or a consumer credit contract are required to be registered but not authorised.
The Financial Advisers Act also allows advisers who operate as part of a qualifying financial entity to provide certain financial adviser services without being registered or authorised in their personal capacity. In this case, the entity takes responsibility for ensuring that the individual advisers within its organisation comply with the requirements of the Act. To become a qualifying financial entity, the entity must obtain approval from the Financial Markets Authority.
Financial advisers will be held to a professional code of conduct, and must demonstrate a certain level of competency in their field of advice. They must also provide a Disclosure Statement that tells you
- what their experience and qualifications are
- how long they have been giving advice, and who they have been associated with or worked for during that time
- whether they have professional indemnity insurance and dispute resolution facilities for their clients.
- whether they belong to a professional body (like the New Zealand Stock Exchange or the Institute of Financial Advisers)
- whether they have any criminal convictions
- if they have worked for a firm that has been convicted of fraud, been made bankrupt, been banned from managing a company or been expelled or barred from a professional body
- what types of investment they advise on
- what fees they charge, how the fees are charged and calculated
- what interests and relationships they have (for example, which investment providers - if any - they sell for, and any commissions or bonuses that the advisor will receive from people or organisations other than you in connection with the service they give you)
For more information on Disclosure Statements, see the Sorted.org.nz.