Hong Kong's financial advisers are mounting a rearguard action against the fallout from a series of scandals - but given the number of them, victory will be hard won. It has been a memorable year for misdemeanours, from life-insurance scams and the misappropriation of investors' funds to Towry Law International's sale of collapsing hedge funds and the landmark case of Susan Field, who successfully sued her financial adviser Barber Asia for negligence. As Derek Young, chief executive of financial planners ipac Asia says, the problem is that the retail financial services sector in Hong Kong is not as well regulated as elsewhere. 'Compared to Britain, the US and Australia, it has a way to go,' he says. 'While securities, product producers and the markets are very well regulated, the bottom line is that it appears financial advisers fall through the cracks.' That is hardly good news for the inexperienced investor who needs professional help to plot a secure financial future. 'You can look at it two ways,' says Mr Young. 'On the down side, consumers have been ripped off, and they will continue to be. The positive is consumers will win in the medium term. The Securities and Futures Commission will do something about it - they are sensible guys.' Again, hardly comforting for the investor right now. Where do you go for advice until that 'something' has been done? Who can you trust? The answer, according to planners eager to burnish the industry's tarnished image, is education or, more precisely, self-education. Mr Young - who admits that it is unfortunate that, at least temporarily, the onus for picking the right adviser is on the consumer - says homework is the key. His own company has drawn up a short list of pointers for potential investors that is designed to weed out advisers who are heading for a fall along with their clients' funds. He advises that before you even start thinking portfolios you should check out the financial planner and ask the following questions: Does the company have a licence? What are its financial strengths and resources? How wide is the scope of its services, given that in Hong Kong financial planning is synonymous with investment rather than such areas as taxation, debt and cash flow and estate planning? You should also ask whether your potential adviser is qualified in both financial planning and financial analysis? Will you get a written financial plan with a comprehensive contents page? How will the planner be paid - by fees or commission (fees at least ensure that the planner is acting for the client rather than trying to earn fat commissions from financial product sellers)? Finally, ask the planner why they chose their job? It may sound like the opening gambit of an awkward dinner guest but, according to Mr Young, it reveals a good deal about the expert who is going to take charge of your nest egg. The retail financial services sector's own self-regulatory organisation, the Institute of Financial Planners of Hong Kong, has a similar, more extensive, list of questions, and recommends personal study to find out as much as you can. Angeline Chin, the organisation's executive director of development marketing, says: 'To pick a financial planner, you must do your homework. You must know what you want your money to do, what risks you want to take. Read about it, read the financial pages of newspapers and ask around. Ask family and friends who they use as an adviser.' In fact, few do use advisers and the institute's research shows that only those with a monthly income of $40,000 or more are likely to seek their help. But Ms Chin maintains that financial planning, far from being just for the mature and relatively wealthy, is essential to everyone. If you are financially independent and without debt, you should have a financial plan, according to Ms Chin, and that includes the young. She points out that while they may have a modest income, many young people in Hong Kong live with their parents which could well mean that they have enough spare cash to think about investing in the future. Once you have examined and assessed your financial adviser and passed them fit for duty, it is their turn to take a close look at you. Taking on a financial planner bears no relation to a quick flutter on the races - you do not, say the elders of the industry, simply slap down $5 million with an instruction to invest it wisely in shares. In fact the initial exercise should be very thorough and usually very long (at ipac Asia, advisers typically spend five to 10 hours with a client before they get down to the real business). 'You go by a client's risk tolerance so the financial adviser is able to set the right expectations,' says Elsa Pau, managing director of Tai Fook Wealth Management Group, and then adds more poetically: 'It is a process whereby we turn your dreams and goals into practical reality.' Getting to that reality always has to start with the clients themselves, she says. What do they want? Who do they have to take care of? Are they concerned about wealth distribution? Might there be a need to pay a guardian to look after their children, or a trustee to take care of schooling. 'If you are the only breadwinner in your family, your protection needs are higher than your capital gains needs,' she points out. 'You start out with the emotions, with a client's needs - it is about living the life you love - and the emotions are backed by logic.' That 'logic' involves due diligence and a wealth of sophisticated software which produces a client's profile; an objective profile, according to Ms Pau, suitable for a 'distrustful' world. But well before the profile there is a list of 11 questions, this time adviser-to-client questions. One of the more obvious, perhaps, involves choosing between a couple of possible investment scenarios: the first scenario is that the client could make $7,000 but this involves a potential loss of $3,000; the other is that the client could make $11,000 but there is a potential loss of $8,000. The answers, apparently, are very revealing - as they are to the question: 'If you lost money tomorrow, would you blame the adviser?' The answers to all 11 questions help build a strategy, says Ms Pau, and only then, after all the logical and emotional analysis do you build a portfolio which does not necessarily involve just investments but also such elements as life insurance and a savings plan. No self-respecting financial adviser would 'choose products and chase after returns', says Ms Pau. 'We are facilitators, not salespersons.' Ian De Witt, partner in Hong Kong law firm Tanner De Witt, who acted for Susan Field, has, unsurprisingly, a rather different angle on the retail investment services sector. The case, he says, was the first step to improving the investment climate in Hong Kong. 'Most people,' he says, 'don't know how to invest money even though they are experienced in their own areas. Normally, the instructions of a client are quite simple, 'I don't want to risk my capital'. It should be straightforward.' He adds: 'The people who invest money are business people, very successful business people. 'Financial advisers aren't the ones who are keeping Hong Kong going.'