Five questions to find the right financial adviser
If you’re thinking of speaking to a financial adviser for the first time you’re probably wondering where to start. Maybe you need advice on planning for retirement, want to know more about investing, or you might just want a financial checkup. Knowing what your reasons are for seeking out an adviser will be a big help towards finding the right one. But before you can get the answers you’re looking for, you need to ask the right questions first.
Choosing the right financial adviser is both a science and an art. They’re well-trained professionals that work in a heavily regulated industry – and are required to meet a set of strict criteria. You’ll need to make sure the adviser has the right qualifications to provide the advice and support you need, but it’s also important to make sure his or her personality and processes match your preferences to get the most out of the relationship.
You’re definitely not alone in wondering how to go about choosing one so, to help you, we’ve put together the five questions you need to ask potential adviser to help inform your decision.
1. How broad is your advice?
Some advisers provide advice on a full range of products from any provider in the market. This includes stocks, bonds, various retirement accounts, insurance products and other investments.
Other advisers are aligned to a specific company and can only offer that company’s products to their clients.
It’s best to find out upfront if your adviser will provide advice that covers the whole market or if it will be limited to certain products or providers.
2. What services do you offer?
Ask a potential adviser to provide a summary of the services they provide. Most will offer a mix of financial planning, insurance planning, risk management, tax planning, retirement planning, investment selection, and management.
Because financial markets change constantly, it’s important to find out how regularly the adviser will review your portfolio. Regular reviews are important to keep your planning on track.
3. How do you charge for your services?
Financial advisers make money in two ways - either by fee or by commission.
Fee-based advisers charge clients an upfront fee. That fee may be based on the size of the clients’ portfolio or just a flat fee. Fee-based advisers might also earn a commission based on the products they sell.
Fee-only advisers earn their money strictly from the fees they charge to their clients – with no commission.
Working out what the implications of different charges will be for your own situation is really important as over time these charges can add up.
4. How do you communicate?
Some advisers deliver their advice face-to-face, while others do so by email or telephone. Think about how you would feel most comfortable working with an adviser and look for one who answers this question in the way that fits best with your schedule and preference.
5. What experience and professional qualifications do you have?
You’ll need to find out how long they’ve been working as a financial adviser and whether they hold a professional designation such as CFP (Certified Financial Planner) or CFA (Chartered Financial Analyst). Another good idea is to ask if the adviser can provide you with testimonials from clients they’ve worked with.
Often finding an adviser (just like good tradespeople) is closer to home than you might think –ask around family, friends or even work colleagues for suggestions. Remember that everyone’s situation is different, but this is often a great place to start.
To find out more about financial advice, read our why seek financial advice guide.