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Choosing whether or not to use a professional financial planner depends on your particular circumstances. If you have the time and interest to conduct your own research – and a reasonable understanding of financial markets and products – you may choose to manage your finances on your own.

If you have more complicated financial affairs, or you have a particular significant financial decision or plan to make, you may choose to work with a financial adviser who can explain the options and present a selection of financial products that match your needs. Investment management and decisions involve many professional skills and considerations. Don’t forget to ask for professional advice when in doubt.

Choosing a financial adviser or financial planner

Suitable advice from an experienced and qualified, licensed financial adviser or professional financial planner may help you save and manage your money better, as well as become more financially secure.

You should verify the licensing, professional memberships or certification status of financial advisers or planners. Many licensing authorities or professional bodies provide online registers for consumers.

Some financial advisers may have professional qualifications. For instance, the CERTIFIED FINANCIAL PLANNERCM or CFPCM designation is a professional certification mark for financial planners conferred by 26 member organisations (including Institute of Financial Planners of Hong Kong) of Financial Planning Standards Board Ltd. To be authorised to use the designation, the candidate must meet initial education, examination, experience and ethics requirements, as well as ongoing continuing professional development and ethics requirements.

Make sure to check the following when you look for a financial adviser or planner:

  • They must know your personal circumstances including your investment objectives, investment horizon, knowledge and experience (including any knowledge of derivatives), financial situation and risk tolerance (including risk of loss of capital), and carefully evaluate your risk profile before making any strategies or financial product recommendations to you.
  • They should give you proper explanations of why recommended products are suitable for you and the nature and extent of risks the investment product bears. They should also document and provide you with a copy of the rationale underlying the investment recommendations made to you.
  • In providing services which involve derivative products, they must assure that you understand the nature and risks of recommended products and that you have sufficient net worth to be able to assume the risks and bear the potential losses of trading in the products.

When selecting a financial adviser or planner, there are ten basic questions you should ask to assess his/her suitability for planning your life goals.

  • What experience does the planner have?
  • What are the planner’s qualifications?
  • What service does the planner offer?
  • What is the planner’s approach to financial planning?
  • Will the planner be the only person working with you?
  • In what way will the planner be remunerated?
  • How much does the planner typically charge?
  • Could the planner’s recommendation unduly benefit anyone else?
  • Has the planner ever been publicly disciplined for any unlawful or unethical actions in his/her professional career?
  • Can our agreement be put in writing?

Your own responsibilities

Even when you are relying on the financial advice from professionals, you still have the responsibility to exercise vigilance and due diligence when choosing investment products.

To assist the financial adviser or planner to better understand your situation and recommend advice that best suits you, you should provide the adviser or planner with the correct and relevant information. Ask the following questions until you understand the rationale behind the advice. For example, even if you are categorised as having higher risk tolerance, it doesn't mean that you are suitable to invest in all kinds of high risk products eg complicated structured products.

  • What risks and uncertainties are associated with the advice?
  • Are the recommended products authorised?
  • What factor will affect the products' return and the maximum possible loss?
  • What conflicts of interest may influence the advice eg adviser's benefits such as commission received from product issuers?

Don't invest in products you don't understand. Remember to think twice before committing.

There are three principal groups of investment advisers selling or advising on financial products in Hong Kong: (1) intermediaries who are licensed by the SFC; (2) banks; and (3) insurance intermediaries. These investment advisers are subject to different regulatory regimes, depending upon the nature of the particular activities that they are conducting. Learn more about choosing investment advisers and analyst advice.

Apart from investments, it's also worth considering advices from other professionals eg insurance intermediaries, accountants, tax advisers, lawyers and even trustees in your financial planning process.