9 questions to ask your financial adviser

It’s January 2020 and one of your New Year’s Resolutions is to start thinking about investing your money properly.

Exciting times.

This is where you finally get rid of that nagging feeling that you really should do something about your pensions and investments. You know it needs sorting out.

But where to start? 

You’ve had a little think and you think you might be able to do yourself online.

But then… the Coronavirus pandemic happens. This is a once-in-a-lifetime public health emergency that we in the investing world call a ‘Black Swan’ - something you thought was impossible, until you see one.

This causes untold devastation to people and families around the world and widespread uncertainty. Inevitably the stock market reacts badly and investors the world over panic. 

The only good thing about this is that you didn’t get around to investing!

But you still need to do something sensible with your finances and you’ve heard that now is a good time to enter the market. But what if something like this happens again? 

If the idea of going it alone makes you feel nervous don’t panic. This is where you really need the help of a financial adviser. But if you’ve never approached one before, how do you know they’re going to be worth their salt?

We’ve put some handy questions together to help you find the right person.

Q1: Are you approved by the Financial Conduct Authority?

The FCA was created to regulate the conduct of financial services firms and financial markets in the UK in order to help people to get a fair deal. They regulate the conduct of more than 59,000 businesses, so the first step is to make sure that your adviser is one of these businesses. 

You can do that by checking the FCA Register by entering their company name or reference number. Our FCA registered number is: 609361 for example.

The other advantage of using an FCA registered firm is that without that, you won’t have access to the Financial Ombudsman Service or Financial Services Compensation Scheme This companies will protect you and your money if things go wrong.

Q2: What qualifications do you have?

This is a great question to ask. The FCA has increased the minimum standards of qualification that financial advisers have to meet to ensure their knowledge is up-to-date.

Advisers now have to be qualified at Level 4 or above of the Qualifications and Credit Framework (equivalent to the first year of a university degree).

Professional advisers also need to obtain an annual Statement of Professional Standing (SPS).

You may also want to look out for Chartered Financial Planners. Chartered Status is the profession’s gold standard for financial planners. It confirms that every Chartered Financial Planner has completed a suite of professional qualifications equivalent to a bachelors’ degree. 

You can check out our qualifications here.

Q4: Do you have any experience of working with people like me?

This is important because an adviser who works with people with £20,000 in savings may have less experience of working with people who have £500,000 for example. 

It’s a good idea to look for case studies from an adviser that show that he or she has experience of working with people in a similar financial situation as you.

Q5: Are you independent?

Financial advisers can offer ‘independent’ advice, where they can consider products and providers from the whole market or ‘restricted’ advice, which is limited to certain products, providers or both. 

Your adviser has to clearly explain if they specialise in certain areas such as retirement planning, or inheritance tax planning for example, and if they limit the number of providers they invest with.

Q6: What are your charges?

It is important to understand what fees and charges you will pay for advice and when you will be expected to pay.

Ask your adviser if there is a fee for an initial consultation. You should also what the one-off fees would be, and what the regular fees would be if the advice is ongoing.

Financial advisers are no longer allowed to take commission from the investments they arrange with the product. This helps to keep things fair and to ensure there’s no bias towards a fund that might otherwise not be suitable for you. 

Q7: How do you assess my financial needs?

Your adviser should outline the process they use to decide how to advise you and what to recommend to you.

A good adviser will ask questions about your current provision, your circumstances, plans, goals, attitude to risk, and any expected changes.

Their advice might not necessarily lead to a product sale. A good adviser’s role is to assess your needs and show you how to reach your goals. This service is paid for by you rather than being dependent on you taking out a product.

Q8: How do you assess whether a product or investment has the right level of risk for me?

Your adviser will explain what they consider your risk profile to be and how each recommendation or product fits in with this. They may use specialist to assess this.

Q9: How often should I review my investments?

You should ask the adviser how often they recommend reviewing your investments based on your circumstances. Most experts suggest that at least once a year is sensible to ensure your investments are in line with your risk profile.

There are often budget changes that will add or remove tax allowances – it is important to review these regularly to make sure you don’t miss out.

Your adviser will discuss and agree the best approach with you.

It’s important you feel comfortable to ask these questions and to feel that you’ll get a clear explanation. Afterall, this is someone who is going to be delving into your personal information, finding out a lot about you, and handling your hard-earned money, so it’s important to get right.

We hope this helps you to feel less daunted about the idea of approaching an adviser. If you’d like us to help, please get in touch. We offer a free, no obligation ‘ask us anything’ chat, which you can book here. We look forward to speaking to you.