How to choose a financial adviser
It’s important to ask a financial adviser who you are considering a few key questions to ensure you find the right adviser for you.
1. What experience and qualifications do they have?
In terms of experience, find out if they have the relevant experience and what their speciality or focus is. For example, an adviser who focusses on retirement investment strategies could have vital experience if you are seeking advice on retirement.
It is also important to know what financial advice qualifications they have and where they obtained them. As well as whether they are currently members of any professional bodies, such as the Financial Planning Association (FPA) or the Association of Financial Advisers (AFA). Membership ensures they are committed to ongoing education and professional development.
Note: From 1 January 2019 the education and experience requirements to become a financial adviser was set by the Financial Advisers Standards and Ethics Authority (FASEA).
2. Who will look after your advice?
Find out and confirm who your point(s) of contact are at the company, and who is personally responsible for delivering your advice. Make sure you understand if you are going to be allocated a specific adviser or if various advisers will collaborate to give you advice.
3. What are their fees?
Look for a financial adviser who has an easy to understand fee structure, which is not dependent on them selling you a financial product.
Some advisers may offer an initial meeting for free and then charge defined fees for advice, implementation and review services.
Make sure you get a fee estimate in writing, along with a description of the services you will receive in return for your fees.
You should check if the fee is charged at a flat rate or on an hourly basis. Where a product or a service is recommended, you should check whether the adviser receives any other benefits such as gifts or bonuses.
4. How do they provide the right strategy and products for you?
Financial advisers have a responsibility to ‘know their customer’ before making recommendations to you and should follow a ‘fact finding’ process to understand your circumstances. Different advisers have different approaches to how they fact find, ask your financial adviser how they will conduct their research.
Financial advisers work with people from many different backgrounds and financial circumstances, so they are not going to judge you. It’s vital you provide realistic information and are clear about your current financial situation, expectations and goals. Giving your adviser a complete understanding of these goals will enable them to create the best strategy and mix of products and investments for you.
It’s also important you convey to your financial adviser the level of risk you feel comfortable with. If a prospective adviser suggests strategies, investments or products that are outside of your risk comfort zone, you should let them know immediately. If you continue to feel uncomfortable, consider seeking advice elsewhere if you don’t see eye to eye.
They should also be proactive about seeking approval to change your plan in the future if your circumstances change or if something isn’t working for you.
5. Does it ‘feel right’?
As in other areas of our life, sometimes relationships work and sometimes they don’t. If you’re going to have a productive and positive long-term relationship with a professional who is working on something as crucial as your finances, it’s important that it feels right to you.
If the relationship doesn’t feel right, feel free to shop around, there is no harm in visiting several advisers before you choose.
Next page > Questions to ask a financial adviser
