Ed McKnight: How do you actually pick a financial adviser?

Managing finances doesn’t come easily to everyone, and for some, it simply takes more time and energy than they have. So if you’re in the market for a financial adviser, how should you go about picking one? Ed McKnight has a few tips. 

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Episode Transcript

Speaker 1 (00:07):
You're listening to the Saturday Morning with Jack Teams podcast
from news talks, they'd be.

Speaker 2 (00:12):
Fourteen to eleven non news talks, there'd be time to
get up with their personal finance expert. Ed McKnight from
Opie's Partners is here this morning. Get a Ed.

Speaker 3 (00:20):
Great to be here, Jack this morning.

Speaker 2 (00:22):
You have for us advice on choosing the right type
of financial advisor and let me guess. Let me guess
the right type of financial advisor is called Ed McKnight
and works for OPI's Partners.

Speaker 3 (00:32):
Well, definitely not, because I'm not actually a financial advisor.
I'm just a lowly economist. Jack. Well, this is critical.

Speaker 2 (00:39):
It is critical, right because people can with the terms.
It's kind of like the difference between psychologists and psychiatrists.
People can get a bit confused sometimes.

Speaker 3 (00:47):
Well, it is important because sometimes people email men say Ed,
can I get your advice about my situation? And I
say no, because I'm not qualified to. I can tell
you what's happy with the economy. But to find a
financial advisor, you've got to start by asking, well, what
type of financial advisor you are after? Yeah, because it's
a bit confusing in New Zealand, so they all call
themselvesinancial advisors, but there are effectively five different types. You've

(01:09):
got mortgage advisors who help you get a home loan.
You've got insurance advisors who will sort out your house
insurance or your life insurance. We've got investment advisors. These
are people who help you out with shares and funds.
Then you've got property investment advisors who help you with
property investment. And then you've got people who specialize in budgeting.
And the really confusing thing in New Zealand is all

(01:31):
of these are legally financial advisors, and they should call
themselves financial advisors, but they each specialize in one different thing.
There aren't many all rounders in New Zealand who will
do every single one of these things because they're actually
quite complicated. So the first thing you've got to do
is be like, Okay, if I want to be better
with money, what does that mean. Well, if you're trying

(01:52):
to buy a house, you probably talk to a mortgage advisor.
If you're worried about the risk that you get sick
and won't be able to earn an income, you go
and talk to an insurance advisor. But there's the first
step that you.

Speaker 2 (02:02):
Go for yeah, okay, that's a very good point. Five.
And they can all call themselves financial advisors quite a
few ways. So if you work out exactly what you
need to prioritize, so whether or not you're looking for
investment advice, property investment advice, insurance advice, etc. Then you
work things down to a short list.

Speaker 3 (02:22):
That's the main thing. And you don't want to just
go to one and think, yep, they'll be okay. So
I always said to people, create a short list of
three names maximum. And the reason is that if you
try and create a list of ten people that you're
going to really do some due diligence on and check out,
it's just going to be too many. In all likelihood

(02:42):
you're probably not going to do anything at all. But
I think don't do one, don't do ten. Three is
a really good number. Now, in terms of creating that shortlist,
my favorite thing is just to go to Google and
I'll tell you what to look for in a second.
But I also know people talk to chat, GPT, get
recommendations from friends, but also get recommendations from maybe an
advisor you're already using. The only thing I'd say about

(03:02):
getting a recommendation from an advisor you already use. Is
that a lot of advisors will have referral relationships. So
if you go to a mortgage advisor that you like,
you say, who should I use for insurance and investments,
They'll probably tell you to use the same person who
sends them business back. And so that you're not necessarily
getting the best person, you're getting somebody who they are

(03:23):
mates with.

Speaker 1 (03:24):
You know.

Speaker 3 (03:24):
Cred a. Head to Google, check out top financial advisors,
create a little shortlist, and then you can really dig
into research. And when I say research, I'm not just
talking about going to their website and seeing do they
have pretty pictures or not? Or do I like the
colors on the website. I think there are five things
that you should look at, but the most important one

(03:46):
is something that your eyes will glaze over at. It's
called a disclosure statement. Now legally, legally, every financial advisor
in the country must have a disclosure statement on their website.
Now you might be like, oh, ed, what does that mean.
Isn't that interesting? Well, it's very important because a lot
of financial advisors in New Zealand won't charge your feet. Instead,
they'll earn commission, maybe from the bank. If you decide

(04:09):
to get a mortgage from them, or from an insurance
company if you decide to get insurance from them, And
on that disclosure statement it must say how the advisor
is paid, any conflicts of interests, what services they provide,
and which product providers they use, whether it's banks or
insurance companies. Now you might decide that, actually, I want
to use a mortgage advisor who's got as many banks

(04:30):
as possible. Or you might say, well, why is it
that this insurance advisor is only using one insurance company.
That means that they can't really give me advice about
the best insurance company for me or the right one.
So definitely head to the disclosure statement on their website
and also make sure you're checking out they can they
prove their expertise to me, So is there any content?

(04:52):
Are there any qualifications that tell me actually they are
good at their job?

Speaker 1 (04:56):
Yeah?

Speaker 2 (04:56):
Okay? And then from that point I guess your book
meetings and work out if it's the right fit.

Speaker 3 (05:00):
Yeah, book three meetings. Figure out who's you respect enough
to give you good advice and who jells.

Speaker 2 (05:06):
You're very good? Hey, thanks so much, Ed, have a
great weekend. We'll make sure All of it's tips are
up on the News Talks EDB website as well, so
you can work through them stage by stage.

Speaker 1 (05:14):
For more from Saturday Morning with Jack Tame, listen live
to Newstalks EDB from nine am Saturday, or follow the
podcast on iHeartRadio