Follow a few simple steps to find a good financial adviser and keep you and your money safe from predators. James Campbell gives some tips.

When talking about financial advice in the newspapers, on TV or radio, all commentators seem to agree on one thing: to avoid making bad decisions we should all see a financial planner.

So how do you find one you can trust? How can you be sure the advice a planner is giving is good and – more importantly – independent?

Research by FSI Consulting indicates, only about 11 financial advisers in Australia can legally call their services "independent", "unbiased" or "impartial".

"The only people who can use those terms are financial advisers who receive no commissions, or if they do, they are 100 per cent rebated back to their clients," says Catherine Crack, a senior consultant with FSI.

FSI says that of the 16,000-plus financial advisers in Australia, only 20 per cent are not owned or controlled by banks, insurance companies or fund managers.

But even if a financial planning company is not owned by a bank or other financial institution, there is a good chance it is aligned with one, or receiving commissions on the products they sell or recommend.

The law requires they disclose these commissions to clients. They also are required to disclose if they receive any other considerations for the products they sell.

These are called "soft commissions", usually lunches, holidays or trips to conferences.

"In return for writing a lot of business with a company, planners sometimes get access to research or compliance advice or other information which a planner would ordinarily have to pay a lot of money to get access to," Ms Crack says.

FSI Consulting has established a website listing advisers who meet independence criteria, www.independent-advice.com.au.

Though the numbers are growing, so far only a small number of planners have signed up.

The Australian Securities and Investments Commission says a good place to start looking for a financial planner is through word of mouth. Ask friends who advises them and whether they have been happy with the service they have received.

ASIC also recommends visiting the website of the Financial Planners Association, www.fpa.asn.au, to find financial planners in your area.

Don't settle on the first planner you see. Shop around until you find someone you are comfortable with.

Licensed financial services providers must, by law, give you a financial services guide (FSG) before they start advising you.

This will explain what services are offered, how the provider gets paid, how they deal with customer complaints and which financial institutions they have associations with.

Advisers can work only with the information they are given.

So tell them as much as you can about yourself before they work on a plan, not just your financial situation, but any health issues you might have and who else is depending on you for financial support.

The financial planner will then come up with a statement of advice that you need to study carefully.

"There are a lot of consumers who go 'yeah yeah' when they get a long document and never read it," Ms Crack says.

"But it is fundamentally important that people take this document and read it."

It's also important to make sure you understand what the adviser is proposing. ASIC suggests you try explaining it to your partner or a friend. If you can’t explain it, how well do you understand it?

Once you decide to proceed, you need to make sure that you review and update the advice regularly.

Adrian Emery, general manager of sales and marketing at AXA, says: "We recommend that everyone enter into an ongoing service agreement with their financial planner. This will set out what they should do for you in terms of ongoing reviews and when you should update it."

By law, all advisers must have a procedure for dealing with complaints, and must inform you of it.

If you remain unsatisfied you should contact the Financial Industry Complaints Service about lodging a formal complaint.  Go to www.fics.asn.au.

Remember that financial advisers who give advice about superannuation, shares and insurance products need to hold a financial services licence, but people giving advice about loans and buying real estate do not.

Be careful not to confuse companies that advertise they can help you with your debts with financial advisers.

Chances are these companies are not offering advice, but looking to set up a debt agreement with your creditors, at a decent fee to themselves.

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