What are the most valuable questions you need to ask a financial adviser? This is a question I am asked frequently by my readers. One of the ways to make sure that you choose the right adviser is to arm yourself with a set of killer questions to discuss at your initial meeting. This will be the start of a beautiful long-term relationship and when the choice of financial adviser could make the difference to whether you gain financial freedom or not, you want to choose well (no pressure!).
There is not a ‘one size fits all’ solution. Consequently, it is important to find the right fit based on your own values and the advisers values. Therefore, before we look at my top 10 killer questions, lets first look at some key considerations.
Where is the adviser based?
For example, if you prefer to communicate face to face then finding an adviser close to you may be best. Alternatively, does the adviser offer video facility for you to have meetings virtually? Don’t assume they all have the technology to offer this.
Why are you reaching out?
Before you prepare your list of questions, think about your own motivations for reaching out to the financial adviser. For example, what do you want to get out of the relationship? Have you considered a financial coach rather than a financial adviser?
Do they show genuine interest?
Does the adviser take the time to get to know you? For example, do they show a genuine interest for your needs?
Our earlier blog post explains how to make better financial decisions. Here are 10 killer questions to ask a financial adviser.
10 Killer Questions
Why do you do what you do?
Julie Flynn from Bree Wealth suggests asking “why do you do what you do?” – This will enable you to read into the motives of the adviser and will offer you some information about their own values. Consequently, you can then ask yourself if the advisers values fit with your own. Similarly, Faith Archer from muchmorewithless suggests to “think about your most important financial goals and then ask the adviser about their experience and qualifications in those areas.” Mike Rawson from 7 Circles suggests, “why do you think you need a financial adviser? What will be the benefit to you and will it be worth the price you have to pay?”
What is in place if your adviser is on holiday or unwell?
It is useful to understand who else would be involved in your relationship with the firm if for example your adviser is away.
How many clients do you look after?
In my experience, most financial advisers, even with very efficient practices, seem to cap out at a maximum number of clients of around 100-150. Too many clients and you don’t get the personalised attention.
What do you charge?
This picture depicts the most common fee structures offered by financial advisers. What you really want to establish is whether the adviser gets paid if they do not sell you a product. That way you can be sure that they are acting in a truly unbiased way. This may be difficult if the adviser only gets remunerated for a product sale for example. A fee structure would be presented to you from the adviser before you start, therefore aiding you with your decision.
What is involved in the annual review and what do your fees include?
In addition to maximising the relationship you have, you want to ensure that you remain an ‘active’ client. Consequently, understanding what is included in your annual review and the fees is important. An ongoing fee is likely to be around 0.50-1% of your investment or pension value, which could amount to thousands of pounds each year. Therefore, think about the fee like a relationship. How would you expect your adviser to respond in times of difficulties? How much personal attention do they give you? As Andy Hart, Founder of Maven Adviser beautifully puts it, “The bulk of your fee to a caring lifetime financial adviser is not to find a few great ideas, its to avoid the many bad ideas.”
Are you independent or restricted?
The term ‘independent’ means that the adviser must be able to offer a broad range of investment products, give consumers unbiased and unrestricted advice based on a comprehensive, and provide a fair analysis of the market. If the adviser is “restricted”, they can only recommend certain types of investment products or products from a limited number of providers. Many people believe that independent is best but this is not always true, particularly if you’re in the early stages of building wealth. Lower savings or pension values may not always give you best value for money in respect of the fees required to access a full adviser service proposition. This is where we believe our coaching service fits in beautifully as we offer our financial coaching service on a low hourly rate.
How do you invest your own money?
Whilst this may come across a little personal, the trust between a financial adviser and you as the client is strengthened if you can work as a partnership. Does the adviser for example, have a number of different investment strategies or do they have a clear preference to one method.
How can I access my financial information?
Especially relevant if you love technology and want to have access to savvy technology and tools! There are some impressive tools available to firms now, some of which enable you to have online access to the value of your investments. Dependant upon your money habits, this may not be right for you. For example, do you want to see the value of your investments everyday? I like to have information available to me quickly and easily so technology to me would be a differentiator as to my chosen adviser.
Describe your financial advice process
A great financial adviser should have a clear, simple and robust process in place. This ensures that you are treated fairly. It also shows you whether their time is for example, used effectively and demonstrates if they are serious about implementing a seamless customer journey. Therefore, be cautious if the adviser can’t articulate their process to you, as this could be a sign that they are ‘salesy.’ If a firm has a great handle on their processes, this demonstrates a cost-effective solution which could result in lower costs being passed down to the client.
What is important to you about money?
This is a beautiful question that Tommy Watson from Paradigm Norton asks his clients. In addition to the factual questions, lift the bonnet and dig deep with the adviser to understand what drives them to deliver an exceptional journey for their clients. The journey may not be smooth, but then that is part of the fun!
And finally…
Have you asked yourself, what are your objectives? If you are seeking advice on a specific matter such as pension or investment advice, ask yourself for example, what is driving this? What do you want to get out of the meeting discussing pensions and investments? By understanding more about your own drivers, you can better understand your motivations and therefore better understand what a good outcome looks like. Your financial adviser, coach, planner should be, in my view, asking these sorts of questions to you.
In conclusion, choosing the right financial adviser is as important as choosing the right house. Make sure you do your research, for example, print off these questions to use at your initial meeting and take the time to reflect on the meeting. If you are not receiving regular contact from your existing adviser, consider a move. This could be costing you thousands!
In addition to this, really what will make the difference is who you are talking too. Do they show a genuine interest in you and does their service proposition suit your circumstances.
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a really useful article. with lots of important points to consider.
This is a really useful post, and there are some questions and thoughts here that I would have considered. Thank you. Claire x
Some good points here as I wouldn’t know where to start when talking to a FA