Ask your financial adviser these 9 questions

It’s that time of the year when everyone takes stock of what they should have done in the last year and what they really should do in the coming year. So if you are really going to get stuck into this area now, here are eleven questions to ask either your current or prospective financial adviser:

1. What products do they advise on and how do they charge for their services, and for how much?

If not on the financial adviser’s website, ask whether there’s an initial advisory fee, whether they charge a percentage for assets under management, or whether they make money from selling you a specific product.

Under the Consumer Protection Code all adviser should offer you the choice of being remunerated by way of fee or commission from a product. Those that do not offer a choice are most likely tied to a financial institution and so their advice may possibly be biased.

2. Do they have a speciality and how do they work?

The real skill in financial advice comes in matching up investment, insurance, retirement planning, estate planning and tax planning. Ask the adviser whether they engage in a financial planning approach by producing Personal Worth Statements, outline tax computations and lifetime cashflow analysis? If not, why not? The better advisers build up a foundation picture of you before proceeding to advise you.

3. Are they authorised by the Central Bank of Ireland?

The best way to find this out is to check the specific business name and its specific address on the Regulators website which can be accessed at http://registers.centralbank.ie/ .

If you are at all concerned about the party that may be offering you advice at the moment and cannot find them on the Central Bank’s main registers you can check out the Regulator’s “Unauthorised Firms List” to make sure that your potential adviser is not listed there either.
https://www.centralbank.ie/regulation/how-we-regulate/authorisation/unauthorised-firms/search-unauthorised-firms Unauthorised Firms are most likely highly suspect and should be avoided at all costs.

4. How qualified are they to give financial and investment advice?

While it is preferable for a financial adviser to have a minimum standard of the Qualified Financial Adviser (QFA) quite a large number of advisers in Ireland do not actually hold this qualification. Nowadays, however, there are a small but growing number of accredited Certified Financial Planners™ and Chartered Financial Planners who have upskilled considerably their own technical and professional skills far beyond the QFA level.

5. Could I see a sample financial plan?

There is no standard financial plan but getting a sample will give you an understanding of not only their approach but their standard of technical competence. Some advisers may provide a lot of detail in their reports which may not be to the preference of some clients while others might cut to the chase, which means there is wide variation. 

6. Which financial institutions do you deal with on a regular basis and why?

A good financial adviser should have agencies with or at least be able to form an opinion on particular insurers, banks, investment companies and other providers as well.

7. What is your investment approach?

If you have a strong preference for a particular philosophy, ask the adviser what his or hers is. For instance, you can ask whether they plan to use actively managed funds or passive investments.

8. How much contact do you have with your clients?

Surveys have found that where financial clients had 12 or more contacts from their adviser in a year, they have had the highest rates of satisfaction with their advisers. Find out how many the adviser uses to keep in touch with their clients.

9. What makes your client experience unique?

In short, “why would I appoint you as my adviser?”. This is a key question that needs to be really focussed on and will give you a better insight into the way the adviser thinks. Is the adviser more style than substance?