Financial advice
Make sure you know your rights and if you think it's all too complicated, then get the right advise from an authorised firm or person. Be sure that you make a well considered decision. It is important that before you purchase the product you have all the necessary knowledge.
Proper information
'Information must be complete, not misleading and understandable', Financial Supervision Act (Wet financieel toezicht-Wft).
A financial service provider must provide the following information before selling a product:
- Information on the product itself. This means, for example, information about how the product can be terminated.
- Information on any agreements with a bank or insurer. This may, for example, be information stating that the financial service provider only mediates in the case of products from a certain bank or insurer or only provides advice on products from this bank or insurer.
- Information on the costs and risks associated with a product.
- A financial information leaflet when a complex financial product is purchased. This is something you have to ask for.
- Information on what the financial service provider earns from the product that he is advising on or mediating for. Intermediaries are obliged to tell you this. Providers who sell products to you directly have to provide details on the costs they have incurred for the advice.
How to identify a good advisor
Always check whether the organisation for which the advisor works has a licence from the AFM.
A good advisor:
- Always checks whether you have understood the explanation.- Answers any questions you may have.
- Provides an advisory report on request.
Questions to be asked by any advisor
- The maximum monthly amount you want to pay.- Your income, expenditure, debts (e.g. loans) and assets (e.g. your savings).
- Your plans for the future: whether you want to work less in the future or retire (early).
- Whether you want stable monthly outgoings or outgoings which vary from month to month.
- The amount you want to pay off.
- The risk you want to take when paying off your mortgage.
A good advisor will calculate the gross (without any deduction of the interest) and netto (after deduction of the interest) costs of a mortgage as they would apply right now and also those which apply in, for example, 10, 20 and 30 years time.
Tips
- Make appointments with a number of different providers or brokers. That will enable you to find out more about the mortgage possibilities and make better comparisons.- Compare the costs and commission with another intermediary, who works with other banks and insurers. Such comparisons can be carried out on certain websites.
- Ask an intermediary how much commission he gets on the product he is advising on. An intermediary is obliged to inform you how much he is actually paid (brokerage fee and continuous commission) when selling you a complex product. He has to tell you the real amount and may not, for example, express it in terms of percentages. He has to do this before the agreement is concluded.
Examples of common complex products
- Investment-based mortgages- Equity-linked insurance
- Investment funds
- Single premium policies
- Life insurance(if you pay a premium)
- Annuity insurance
- Life course equity-based insurance
Regulation by the AFM
The AFM keeps a close watch on whether financial enterprises provide good quality information. The AFM can take action if it discovers that a firm is not keeping to the rules in its publicity or advertising. Such action takes place afterwards. The AFM does not assess publicity or advertisements before they appear on the radio or television or are published in a newspaper.