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10 Questions to ask your financial adviser

Are you looking for a new financial adviser or reviewing the value of your bank’s or stockbroker’s service? If the answer is yes, here are some questions that may be useful to find the right firm or right adviser. Before you embark on the search, it’s important to work out what you need and the kind of service you expect beforehand. Below is a handy list of questions to go through:

1. What are the services I should expect to receive?

You may need advice for a specific product or investment or need someone to provide advice on all of your financial affairs.  Advice can be a one-off event or ongoing with regular reviews.

  • Is it an impartial financial planning service, consolidating all of your finances (ie not just looking on those areas where they can sell investments and other products)?
  • What does a review entail and how frequently do they occur?
  • Who will conduct the review and how will the advice be given? For example, is the advice face-to-face, a written report, or both.
  • What, if anything, do they specialise in?

2. What qualifications and professional memberships do you hold?

There is a whole range of accreditations and professional qualifications that advisers can have. Always ask to see a copy of their Statement of Professional Standing, which confirms that an adviser has the required qualifications and adheres to a code of ethical standards.

  • Chartered Financial Planner is the premier technical qualification. It is issued by the Personal Finance Society and is equivalent to an undergraduate degree and other professional qualifications such as Chartered Accountant or Solicitor (LLB).
  • Certified Financial Planner (CFPCM) is the preferred qualification of many leading financial planners. It has a similar status to Chartered but with a greater emphasis on the ability to deliver a holistic financial plan. It is issued by the Institute of Financial Planning.
  • Diploma in Financial Planning (Dip PFS, or Dip FA), or equivalent, is the minimum qualification required to operate as a regulated financial adviser after 1st January 2013.

3. What is your previous experience?

  • How long have you been in financial services?
  • How long have you been with your current firm?
  • Who did you work for previously?

4. Do you offer independent advice?

  • What are the restrictions, if any, on your advice?

5. Who are your typical client types?

  • Do you have examples of existing clients who are in a similar situation to you?
  • Can you provide references?

6. Do you have a clear investment process?

The firm’s investment process needs to be clear and well defined and with deliverable and measurable outcomes. Some advice firms may choose to outsource this part of their work, while others will have their own investment process.

  • Can you provide a documented copy of your investment process?
  • Is the process evidence-based and repeatable?
  • Have steady, calculable results on a risk-adjusted basis been delivered?

7. What will I pay?

It’s important to know what you are paying for. Some advisers may only charge when you invest, but this could encourage them to sell you products you may not need. Sometimes, good advice is to do nothing for the time being… but you should still pay for that advice.

  • How are fees calculated (eg time-cost/fixed fee/percentage of assets invested)?
  • Do the fees only apply if you buy an investment product or are you paying for truly unbiased advice?

8. How are you remunerated?

Before 1st January 2013, some advice firms relied heavily on commissions from product sales, which are no longer allowed. Commission on historical products can still be paid to advice firms, but it is worth ensuring that your advice firm has a sustainable future based on advice rather than sales incentives.

  • Does the business receive any other income, other than from fees (eg commission on products)?
  • How are advisers incentivised for their work? For example, are you happy that they are rewarded for giving good advice rather than meeting sales objectives?

9. What makes you different?

  • Does the business have a unique selling point and is it what you are looking for?

10. Lastly, ask yourself can I work with this person?

  • Do you understand the terms they explain to you?
  • Do they have a genuine interest in your objectives and goals?
  • Do you trust them to look after your dependants?
  • Do you think you could become professional friends?
  • Do you have a rapport with them?

Ian Thomas is authorised and regulated by the FCA. This article is intended to provide helpful information of a general nature and does not constitute financial advice.


About the Author:

Ian Thomas has over 25 years’ experience in financial services and has previously worked at JP Morgan, Fidelity, Old Mutual Wealth and AXA. In 2011 he established Pilot Financial, which offers integrated financial planning and wealth management services to private clients, together with workplace pensions and employee benefits advice to businesses. Ian studied at Universität Düsseldorf and the University of York and holds a BA (Hons) in Economics. He is both a Certified and Chartered Financial Planner and also a Chartered Wealth Manager.

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