10 Questions to Ask Your Financial Adviser

When meeting with a financial adviser, it's important to ask questions that help you understand their qualifications, approach, and recommendations.

You are the client, and this is your opportunity to discuss your financial matters.

If you’re considering speaking to a financial adviser, but you’ve never worked with one before, it’s difficult to know what questions to ask to get the most out of their work. We’ve compiled a list of questions that you may want to consider asking:

1. How much is the advice going to cost?

Financial advisers are required to disclose their charges before accepting you as a client, in accordance with industry regulations. Fees can vary, with some advisers billing by the hour, and others charging a fixed fee or a percentage of your pension pot for retirement advice or general investment guidance. However, the final cost will depend on factors such as your specific requirements and the level of service you desire. While the adviser may not be able to provide an exact figure, they should be able to offer an estimate and possibly even an upper limit to give you an idea of what to anticipate. Questions to consider: What is the total cost and can I set a maximum? Can the cost of the advice be deducted from my investment in the product to spread the payment? How much are fees for things like rebalancing, taking money out, putting money in, paying your insurance, etc.?

2. What types of services do you offer, and are you independent?

The adviser is required to outline the services they provide and specify their status as an independent or restricted adviser. 'Independent financial advisers (IFAs)' offer a broad spectrum of financial products available in the entire market. They should provide impartial and unrestricted advice based on a comprehensive analysis of that market. An adviser is 'restricted' if they exclusively recommend specific types of investment products or products from a limited set of providers.

3. Could you please tell me who is your typical client?

Certain financial advisers may exclusively work with individuals who possess a minimum pension pot size or a specific amount of investable funds, such as £50k-£100k or more. But it’s worth having a conversation with them as you may be a future great client for them so they may be able to work with you now!

4. What service will I receive?

When working with a financial adviser, clarify the services you'll receive, including financial assessment and product recommendations. Discuss how the adviser approaches asset allocation, risk management, and portfolio diversification. Ask about their market search scope, ongoing updates, and support like valuations and tax assessments. Also, confirm the communication methods for advice and updates, be it reports, emails, meetings, or calls.

5. Will you be the one giving me the advice / my point of contact?

Which financial domains can you provide comprehensive market advice in? Who are the individuals responsible for managing my investments, and what is their team composition? Are both male and female advisers available, and can I specify a preference for the adviser who handles my advice? It’s important to have clear communication with your adviser.

6. What is the advice process, and how does it work?

Understanding the process can ease uncertainty and will help to reassure you. Questions to ask about the process include: before officially engaging your services, will you provide an initial meeting or call to discuss my advice requirements? What are the subsequent steps and when should I expect to sign any necessary documents? Is the initial meeting conducted in person, and how much time should I allocate for it? Could you outline the agenda for this meeting and what information you'll need from me?

7. What should I prepare for our first meeting?

To prepare for your first meeting with a financial adviser, they will ask you to complete a 'fact find' form with your personal and relevant details ahead of time, as this will save meeting time. While extensive financial records aren't required, providing a comprehensive snapshot of your financial situation, including current salary, mortgage, pension, and savings, will enable your adviser to create a more accurate financial plan.

8. What is the review process?

Regarding the review process, inquire about the firm's procedures, frequency, and associated costs. Understand what takes place during these reviews and whether the same adviser who provided initial advice will conduct future reviews of your situation. Additionally, it's essential to clarify the protocol in the event your adviser departs from the firm.

9. How often should I meet with you?

The frequency of meetings with your financial adviser varies based on factors like your financial goals and complexity, but generally, initial meetings help establish a foundation, followed by annual or semi-annual reviews for goal assessment and plan adjustments. Major life changes or market volatility may prompt additional meetings, and you can also meet as needed for pressing financial matters. The ideal meeting schedule should align with your goals and comfort level, emphasising open communication with your adviser to ensure your financial plan remains responsive to life changes and market conditions.

10. How am I safeguarded in case of adverse outcomes?

When you receive regulated advice, the financial adviser provides tailored recommendations based on your situation and the information you've provided. This ensures that you can escalate any concerns to the Financial Ombudsman Service if you believe you were sold an inappropriate product or received unsuitable recommendations. Additionally, you have protection under the Financial Services Compensation Scheme (FSCS).

Finally, you can and should also ask questions relating to the adviser’s qualifications and background. This will help you gauge whether they’re the right fit for you. Things to consider asking include:

• How long have you been recommending investment and insurance products?

• How long have you been actively and consistently creating financial plans for clients to help them achieve their financial goals?

• What is your training background, and where did you learn how to diagnose, manage, and solve your clients financial problems?

• How many years did you spend training for your position as a financial advisor?

• What firms have you worked for in the capacity of a financial advisor?

• How many written financial plans have you created for clients?

Keep in mind that this is just a brief checklist – you are the client, and this is your opportunity to discuss your financial matters. You don’t have to use financial jargon and can ask any questions, even if you think they’re ‘stupid’ - they never are.

We understand that personal beliefs about money can be deeply ingrained, and discussing finances can be challenging. However, finding a reliable adviser is invaluable, and it's worthwhile to invest effort initially in building a productive relationship.

Remember that advice comes with a cost, so assess whether the investment will yield returns for you.