This is Part II of Dealing With A Financial Adviser. Refer here for Part I – Who are Financial Advisers?
Q: What can I expect a FA representative to do when he recommends an investment product to me?
A: A FA representative must take all reasonable steps to:
- Determine your investment objectives, risk tolerance, financial situation and investment experience;
- Ensure that the product he recommends is suitable for you, taking into account the information you gave; and
- Explain to you why the product he is recommending is suitable for you.
You should provide complete and accurate information to ensure that the FA representative is able to recommend a suitable product for you.
Q: What information is a FA representative required to disclose to me when recommending an investment product?
A: When recommending a unit trust or life insurance policy, a FA representative is required to disclose to you the key features of the product including the following:
- Nature and aim of the product Whether the product is a life insurance policy or a unit trust, and whether it is meant for protection, savings or investment.
- Benefits of the product Information on the amount and timing for payment of benefits and whether the benefits are guaranteed or non-guaranteed.
- Risks of the product Details of the risk factors that may result in the benefits payable being less than the illustrated values (for a life insurance policy), and the risks stated in the prospectus or profile statement (for a unit trust).
- Details of the product provider: The business address and permitted activities of the product provider, and the relationship between the product provider and the FA.
- Fees and charges to be borne by you Details of the amount and nature of fees and charges to be paid by you, and the frequency of payment.
- Warnings, exclusions and disclaimers Information on the procedures, charges and restrictions for withdrawal, surrender or claim of the product.
- Reports that you are entitled to receive Details of how often you can expect to receive reports on your unit trust or life insurance policy and where you can get the reports.