• Christine Lusher

Avoiding financial scams. Financial advice, who should I listen to?

Updated: Mar 16, 2021

Financial advice is often in the media for the wrong reasons. Recently we have been reading about Melissa Caddick who has left a devastating trail of over $20million.

How does this happen? Tips to ensure it does not happen to you.

As a starting point you should ensure your financial planner is licenced, look up the Financial Planners Register on the Australian Securities & Investments Commission Moneysmart website. If the person offering advice is not on the register, they are not licenced, and you should not take financial advice from them. Melissa Caddick was not on this register and this basic check would have rang alarm bells.

Ensuring your adviser is licenced will give some assurances that they have the required qualifications, experience, industry association membership and required complaints handling process. This is a starting point but is no guarantee of good advice.

If you are seeking a financial planner, ask other respected professionals you deal with for some advisers to consider. Or utilise financial planner search tools available via the Financial Planning Association or Adviser Ratings.

Other Scams; Seminars and Coaching Workshops

Seminars and Unsolicited Phone Calls

Last week I received an unsolicited phone call offering me a seat in a seminar to inform me of "ways to reduce my tax, approved by the ATO." Pretty sure this seminar would be trying to sell me something, potentially a negatively geared investment property via a related developer. No thanks, if I want tax advice, I will speak to my accountant not take advice following on from a telemarketing call.

Money Coaching Workshops advertised on social media. Everyone is a money expert on social media. There are some great courses available that are run by qualified financial planning professionals. Others seem a bit sketchy; consider who is running the seminar and their background. If the presenters run a property development business, the course is likely a marketing endeavour to attract buyers under the guise of a financial coaching course. We all need to make a living and if someone is offering a "free" or cheap course think about what they will gain. If the course provider is not making money from running the course and providing education, then there is likely an ulterior motive.

If I want Legal Advice, I will consult a Solicitor, Plumbing advice a Plumber and Medical Advice a Medical Doctor. I am not going to enrol in a money coaching workshop run by a recruitment consultant, it’s not their area of expertise. Taking and acting on advice (even if it is presented as "coaching") from an unlicenced person is risky; there will unlikely be any recourse should the advice prove unsuitable or result in losses.

Engaging a financial planner should be life changing in a positive way. We wish everyone well with their financial journey and finding the right financial planning professional to help.