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Best Questions to ask when looking for a Financial Adviser​

Why it's important to ask questions

There are many financial advisers out there, and whilst they are mostly all highly trained and offer good customer service, it’s important to find the right one for you.  What is offered can vary greatly and your own unique situation, outlook, and even personality can determine what adviser is the best fit for you.

Don’t be afraid to ask a lot of questions, a good finical adviser should be happy to answer questions and explain things to you in a clear and easy-to-understand way.  After all, explaining the advice (which can sometimes be complex and technical) in a patient and easy to understand way is an important feature that many look for in a financial adviser.

If they can’t or won’t answer your questions then that in itself may help you decide whether to use the adviser or not!

Everyone’s situation and the best questions for them to ask will be unique, but the following should cover the most common and important ones.  If you would like any more information on any of the below, or indeed would like to ask an Independent Financial Adviser some questions, then please get in touch, we are always happy to chat,

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What areas of Financial Advice do you specialise in?

Financial advisers will typically provide a written financial plan or recommendation report that provides an overview of your current financial situation and presents recommendations to reach your future goals. Depending on the complexity of your individual circumstances, services provided may include pension planning, investment advice, equity release, protection advice and mortgage advice. Some of these services can be complex with some advisers specialising in certain areas. If you are aware of the services you require then question advisers on their ability to provide the services needed.

It’s important to pay particular attention to how they plan to invest your money. Do they outsource this responsibility to a discretionary fund manager or choose funds and investments in-house? Whichever method they use it’s also important to understand the process used to arrive at their recommendations.  It may be best to avoid financial advisers who simply pick funds from a best-buy list and who do not carry out robust research themselves or who do not have robust processes in place. 

It can also be helpful to ask what type of clients they usually deal with, as this can give some indication of what their day to day experience is and how relevant it is to your situation.

Are you Chartered

All IFA’s have to have a certain level of training before they can offer any financial advice.  And this minimum level itself is very hard to achieve and often represents many years of studying, training, and development.

Over their careers, advisers can continue to gain experience and further qualifications until they reach the ultimate accreditation of Chartered Status.  Chartered Accreditation is generally seen as the benchmark for quality financial advisors who have achieved superior standards of skill and ethics, and have demonstrated an outstanding commitment to achieving the highest levels of knowledge, skills, and behaviour and are dedicated to maintaining this.  As well as having to achieve a level of qualifications and experience to gain chartered status, those with Chartered status will be required to adhere to a royal charter, bye-laws, regulations, and additional behavioural standards, set by the relevant Chartered Body (for example The Chartered Institute for Securities and Investments (CISI), “the leading professional body for securities, investment, wealth and financial planning professionals“.

An adviser with a chartered status doesn’t mean that they are automatically “better” than advisers without the status, but it is an extra piece of information that can help you decide on the right adviser for you.  

Are you Independent or Restricted

Generally, a Financial Adviser will be either Independent or Restricted.  It’s very important to establish at the start which type of adviser they are, as the advice they can offer will vary considerably.

Independent Financial Advisers (also known as “whole of market” advisers) provide tailored advice based on their unbiased research across the entirety of the financial market to source the best products and investments that are available.  

This is opposed to a Restricted Adviser that is tied to product providers and their range of products.  A restricted adviser is tied to only being able to recommend certain products, product providers, or both.  Usually from the same firm that employs them.

A restricted adviser should clearly explain the nature of their restrictions and how this will impact their advice.  If you decide to approach a Restricted Adviser then it will be worth asking them to explain how their advice is restricted and what impact that will have on the advice they will give you, compared to an independent adviser.

If you would like to know more on this topic please read our further article on the difference between a Restricted and Independent financial adviser.

What Will the Process be?

Each adviser will have a different way of going about their work and the process by which they deliver advice.  Understanding the process and the timelines involved can not only be a good way of determining how they approach giving advice but will also help you understand what you are getting involved in and how the process will work if you decide to go ahead with the adviser.

Do you offer a Free Consultation?

A free consultation can be a great way to get an idea of what a financial advisor is like, what they offer, how much they charge, and what their plan would be for yourself. 

It can be hard to know what financial advice you need or even if financial advice is right for you at all.  Especially as many people have never used a financial adviser before.  It is also important to make sure that you feel you will have a good and trusted relationship with your adviser, and it can be hard to judge if this is the adviser for you without meeting them first.

Make sure you ask if they offer a free consultation, as this can be key to getting the right adviser.  Ask if they will require you to hand over lots of personal financial information, prepare a lot of documents or fill informs beforehand.  The initial consultation should be about getting to know each other and discussing the situation. You don’t want to spend hours preparing for a first meeting that might not go anywhere or feel like you need to proceed purely because you have invested so much time in the process so far.

Please remember that even if the initial meeting is free, you should not feel obliged to sign up with that adviser.  And if any pressure is applied to sign up, then this is likely to be an indicator that they are not the right advisor for you.  Trust your instincts; it’s okay to walk away.

What are your fees and how are they structured?

Whilst cost by itself is probably not the best way to choose an adviser, it is likely to be an important part of choosing the right financial adviser for you.

A financial adviser should be able to tell you if they charge fees as a percentage of the money they manage for you, charge by the hour or have fixed fees.  There will likely be different charges for the initial advice given and for an ongoing advice service.  Honest and transparency around fees should be an important part of the financial advice process. 

Since 2013 financial advisers providing advice on pensions, investments and annuities can no longer receive any commission from the product provider.  Since financial advisers do not receive a commission on most products they recommend they will instead charge their clients a fee. The fees charged by financial advisers do vary considerably with a recent survey by the website VouchedFor* highlighting this. They found that the average initial fee charged was 1.72% and the average annual ongoing charge was 0.69%.  Hourly fees were an average of £178 and ranged from between £125 to £250.  For investment-specific advice, initial fees drop sharply the more money that a client invested.  On average, someone with a portfolio worth £100,000 would be charged 2.06%, while an investor with £500,000 would pay 1.24%.

The method of paying these may also vary from upfront payment, monthly payment or a deduction from money invested and managed by the financial adviser.

An adviser may offer different levels of advice or a different type of advice service for different fees.  No matter what the cost, the adviser should be able to explain clearly to you what the fees are, how they are collected and what you are getting for your money.  This should all be explained in a clear and transparent manner and certainly before any chargeable work is undertaken.

Leaf Financial Advisers tends to prefer fixed fee advice for initial advice as we find that this can be tailored to the individual situation rather than based simply on the size of the pension pot or investment fund, meaning clients pay a fair price for the advice they receive and are not charged based simply on how much they already have.

Flexible in providing advice?

Most people have busy lives these days in which they have to fit in seeing a financial adviser, or potentially several if they are shopping around for the best one.  It can be useful to find out how flexible an advisor is likely to be, as this can impact on the overall quality of the advice process as well as how easy and convenient it is to meet them in the first place.

The flexibility offered by an adviser can make the advice process a lot more convenient and straightforward.  Not to mention that a relaxed and comfortable advice process can lead to better outcomes due to more honest and detailed conversations between the adviser and client.

Many advisers will require you to come to their offices, usually during office hours, Monday to Friday.  Some will only offer online appointments.  Other advisers (such as ourselves) will offer to come to your home to conduct meetings, from the initial consultation all the way through to going through the final advice report as well as also offering online and telephone meetings.

Flexibility on times of meetings can also be important, as hopefully, the advice process can work around your schedule and not the advisers.  Finding out when they offer their meetings can be useful.  For example at Leaf Financial Advisers we offer meetings in the evenings and weekends, to help work around the schedule of our clients.

What financial adviser qualifications do you have?

In the UK Financial Advisers will at a minimum need to have a level 4 qualification in financial advice which is recognised by the Financial Conduct Authority. These include: The Investment Advice Diploma from the Chartered Institute of Securities and Investment, the Diploma in Regulated Financial Planning from the Chartered Insurance Institute and the Diploma for Financial Advisers from the London Institute of Banking and Finance.

As well as having the appropriate qualifications, the adviser will also need to have a Statement of Professional Standing (SPS) from an approved body.

Are you Registered and Regulated

To practice as a Financial Adviser in the UK, an adviser must be registered with the Financial Conduct Authority (FCA). You can check the FCA’s online register for any adviser throughout the UK to ensure that they are regulated to give advice and what types of advice they are able to advise on.  The firm they work for should also be on the register, and their FCA number can also be used to confirm if they are legitimate.

For example, Leaf Financial Advisers’ FCA number is 944216 and we can be found here on the FCA Register.

Can I see some reviews?

Seeing if your potential advisor has great reviews and testimonials from clients can be useful to see how others viewed the advice that they were given.  Reviews on public websites such as Google Reviews can help give an idea of not only how the service was received but what type of advice has been given and how each area has been reviewed and if the reviews and comments touch on the sort of things that you would value in an adviser.

Financial Advisers should not be reluctant to share reviews with you.  For example, Leaf Financial Advisers are happy for potential clients to see our collection of 5 star Google Reviews as it helps potential clients get an idea of what we do and how it is received.

Final Thoughts on What Questions To Ask A Financial Adviser

It can be a big decision in choosing which Financial Adviser to go with.  As we have discussed there is a wide range of types of advice services offered, how the advice process works, how advisers charge, how flexible they can be in how they meet clients and deliver advice and more.  As it’s key to finding the right fit for your unique situation, asking the right questions can be a big help in working out which adviser is best for you.

Not only is asking the right questions important but even the process of seeing how advisers deal with and respond to the questions can be useful – are they reluctant, do they explain things clearly and are they happy to have questions thrown at them?

We are Independent Financial Advisers and offer advice on many areas such as pensions, investments, equity release and financial planning.  We are happy to answer any question you may have, even if those questions are on what the best questions to ask a financial adviser are!