Amid the Commonwealth Bank scandal and confusing reforms, choosing a trustworthy financial advisor can be a daunting task for the everyday consumer.

The Commonwealth Bank has been accused of giving reckless financial advice to customers, while at the same time the Federal Government is proposing a loosening of financial planning industry regulations.

• Why the FoFA reforms should matter to you
• Consumer groups warn on financial advice reforms

It is estimated that up to 80 per cent of financial advisors are directly employed by the big banks and insurance companies, meaning they are more inclined to sell their products.

McAuliffe Wealth Management principal Ash McAuliffe says to watch for conflict of interest.

“While the advice strategically may be fine, it’s that placement of product and the remuneration, that’s where there’s potential for conflict of interests,” says financial advisor Ash McAuliffe, the principal advisor at McAuliffe Wealth Management.

So how can you find trustworthy financial advice that is right for you?

How are they employed?

Mr McAuliffe says that you should establish who your financial planner is employed by when you first meet them.

“I think the main point is they need to understand where the advice is coming from. With that knowledge, they can then know what they can trust about the advice, and what not to,” he says.

“The advisor should be able to clearly articulate and say ‘Look I’m employed by…’, or ‘I’m licensed through…’, and just make that clear from day one.”

Every financial planner has a financial services guide (FSG), which outlines how they charge and if they have links to product providers like banks. Ask for a copy.

It is also worth noting that some super funds offer free general advice to members if you want an alternative opinion.

Independent consumer advocate, Christopher Zinn, agrees that individuals need to establish if their financial planner is working in their interest.

“I think a fair question to ask is how independent are they?” he says.

Make sure they are compliant

Mr Zinn says that individuals should ask how compliant their planner is with existing industry regulations, like the best interests duty, which legally requires your planner to put your interests first.

“One of the first questions I would ask them is ‘how compliant are you with the original Future of Financial Advice (FoFA) legislation?'”

The existing FoFA regulations includes planners providing opt-in provisions to clients every two years, telling them how much their financial products are costing them, and asking if they want to continue.

What are their credentials?

It’s important to check if the financial planner is a member of any professional organisations, which have standards of behaviour, says Mr McAuliffe.

“People should look for qualifications and membership of professional bodies.

“That’s a good spot to find advisors as well. Go to the association websites, and they’ll point you in the direction of an advisor near you.”

Mr McAuliffe also recommends finding a financial advisor who has a degree level education, rather than a certificate.

“You can get certificates that enable you to practice and be licensed, but my opinion is that your advisor needs to have a degree and a bit of experience behind them,” he says.

Ask your friends

Consumer advocate Mr Zinn says that individuals should pool their information to find reliable financial planners.

“The other thing that is happening is how we can use people power, and how consumers can pool their information about advice and advisors to get our own reliable measure about how to find a good advisor,” he says.

Mr McAuliffe agrees, saying a lot of clients are referred by existing clients.

Don’t be scared off advice

Mr McAuliffe says that there are plenty of good financial advisors out there, and consumers do not need to be too fearful of receiving bad advice.

“If you’ve got a planner who’s qualified with a bit of experience, they’re a member of a professional body, and their remuneration isn’t related to the product that they recommend, then I think you’re pretty safe.”