10 Questions to Ask When Choosing a Financial Adviser

Published / Last Updated on 09/05/2024

All industries and professions will have good, average, and poor standards of worker.  There will be good and poor teachers, solicitors, fish fryers, mechanics, and builders.  It is the same for financial advisers, there are exceptional ones all the way down to poor advisers and even some rogue advisers.

Whilst we are financial advisers, we still believe you should be prepared with a set of questions to ask both us and any other firm if you are seeking a financial adviser or have drawn up a shortlist of advisers that you would like to talk to.

Think of this like you are interviewing for a job.  You are recruiting your financial adviser so, here are 10 questions you may wish to ask:

  1. How long has your business been trading?
    • Remember, the average financial services firm only lasts around 4-5 years, so look for longer established firms or if newer firms, are they innovating?
  2. What qualifications does you have?
    • There is an ‘alphabet soup’ of designatory letters out there if you see:
    • Cert PFS or CeMAP, this indicates a Certificate in financial planning or Certificate in Mortgage Advice and Practice (the equivalent of an ‘A’ level).
    • Dip PFS or similar, this indicates a Diploma in financial planning (the equivalent to 1st year degree).
    • Chartered Financial Planner and Certified Financial Planner (indicates formal qualification up to 1st Class Honours Degree).
  3. How do you calculate fees and what are your fees?
    • Some financial advisers charge a % upfront of the value of your wealth (usually up to 3%) and an ongoing % of wealth charge (usually up to 1% pa).
    • Some financial advisers charge a set fee for advice and a set fee for any applications made.
    • Some financial advisers charge hourly rates.
    • Some financial advisers charge a ‘core fee’ based upon time to do works and a % risk fee based upon the complexity of work involved.
  4. How many clients do you have and of those, how many active clients do you have?
    • We suggest most financial advisers cannot cope timewise with more than 150 active clients.  If you adviser gives much bigger numbers than they may have time to fully look after your needs.
  5. Are you an employee, partner, or the owner of the business?
    • Employees move jobs every few years, but owner managers and equity partners have the interest of the business at their core so looking after their clients in the longer term is paramount.
  6. If an employee, how many firms have you worked for and how long with each one?
    • The answer to this will help you work out if they are ‘job hoppers’ and/or if this was because they were poor advisers?
  7. How many complaints have you had in total and how many were taken to the Financial Ombudsman Service?
    • Do no believe any firm, let alone a financial adviser has never had a complaint. 
    • Human error means we have all made mistakes even when an adviser is genuine.  It is then you can gauge the quality or service of the adviser.
    • Clearly the number of complaints will give you an indication of other consumers being satisfied with services or not as well as whether they handle complaints nicely or not if a greater % of complaints end up with the Ombudsman as agreement cannot be reached.
  8. Are you directly FCA authorised or via a Network?
    • Many advisers go through a network rather than direct with the Financial Conduct Authority (FCA) meaning they must comply with the rules and restrictions of the network in terms of products, services, charges, and even higher fees as there are more tiers of management taking a share of ‘the pie’.
    • Directly authorised with the FCA may mean the adviser and firm as more confident in the overall running of their business and dealing directly with the FCA on all regulatory matters.
  9. Do you operate Panels or Platforms or are you Whole of Market?
    • Some advisers have a restricted panel of firms that they use.
    • Some advisers use just one platform gateway, meaning you will usually get their own in-house or preferred platform with pension, investments, ISA all on the platform (think of it like you can only walk into 1 supermarket with lost of products on the shelves but no other shops, retailers, or outlets).
    • Some advisers are true whole of market advisers that do not operate panels and are not tied into or linked to 1 platform but research and select from the whole market.
  10. What is the longevity of the firm?
    • Some firms are smaller, and you need to know what happens when/if the adviser/owner dies, is in poor health or wants to retire?
    • Some firms are bigger so there are replacement advisers, but this may mean your adviser changes frequently.

That’s your 10 questions but also go with your ‘gut reaction’:

  • Does the adviser explain things in a manner you can understand?
  • Did the adviser talk down to you?
  • Did the adviser blind you with science and jargon?
  • Do you actually like the adviser?
  • Do trust the adviser?

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