New Zealand law entitles you to specific information when you are seeking advice from an investment adviser and before you pay money into an investment.
The aim of the law is to give you the information you need so that you can decide whether or not an adviser is right for you and whether or not an investment is right for you.
Thinking about using an investment adviser?
You have the right to information about the adviser, the investments they advise on, and the fees you will pay.
An investment adviser is a person who gives investment advice as part of their job. Many people are investment advisers, including financial planners, financial advisers, sharebrokers and some lawyers and accountants.
An investment adviser does not have to have any qualifications or be registered or licensed. However, when you go to an investment adviser they must give you a "disclosure statement".
This tells you about themselves and the types of investments they give advice on, e.g. superannuation, shares, debentures, life insurance, unit trusts and group investment funds.
Some advisers offer a wider range of investments that others. Some specialise in certain types of investment (e.g. shares). Others only offer products they are paid to sell and may not suggest other investments that could suit your needs.
The disclosure statement must explain the fees you will pay the adviser, and about commissions or other rewards the adviser gets from selling you a particular investment product.
The adviser should give you the disclosure statement before they give you any advice and before you pay any money.
Thinking about investing?
The law gives you the right to important information, which could affect your investment decision.
Most investments must have an "investment statement" which should given to you before you pay any money. It should answer these questions:
- What sort of investment is this?
- Who is involved in providing it to me?
- How much do I pay?
- What are the charges?
- What returns will I get?
- What are my risks?
- the investment be altered?
- How do I cash in my investment?
- Who do I contact to inquire about my investment?
- Is there anyone I can complain to if I have problems with the investment?
- What other information can I get about this investment?
This is information which you are entitled to have.
The aim is to enable you to make an informed decision on whether or not to invest. It is in a set format so that you can compare one investment offer with another.
You can also ask for the "prospectus" which has more detailed information about the investment.
If you are ever offered an investment which does not have an investment statement or prospectus you should be suspicious. Seek advice from someone quite independent of the person offering the investment.
Unsolicited offers of investments made by telephone or email should be treated with suspicion. They are likely to be scams.
Hang up on the callers and delete the emails. It is unwise to respond.
