The Banking Ombudsman is cautioning investors in the wake of the global financial crisis.
Deborah Battell said with the economy showing signs of improvement, individuals were starting to invest again, despite many being badly burned during the crisis.
The Reserve Bank estimates the cost to investors of the almost 50 finance collapses up until 2011 at $5.9 billion, based on outstanding liabilities at the time of collapse.
More than 170,000 investors are thought to have suffered losses.
Ms Battell has issued guidelines for investors.
Some people wrongly thought that alternative investments such as managed funds were as safe as term desposits, she said, and that because they were investing through a bank they would never lose their capital.
That was somewhat surprising given people were required to sign a form saying that they understood they could lose their capital.
But Ms Battell said many told her during the global financial crisis that they thought investing through their banks in products like managed funds or unit trusts was free of risk.
She said in general terms financial advisors have to make sure that the representations that they make about investments are accurate, and there are certain things that must be disclosed.
They have to be registered and go through an appropriate investment process.
Ms Battell said you would expect a good financial advisor to ask a lot of questions about your needs, your risk appetite, what you're hoping to achieve from your investments and over what time period.
She said an investment advisor would be expected to provide information to help a person make those decisions, but at the end of the the investor makes the decision and must be accountable for it.
A copy of the investing guide is on the Ombudsman's website.