Financial advice explained 10 Questions to ask your financial adviser

Financial advice

Be sure that the adviser you use is well suited to dealing with your needs

Your financial adviser should be someone you trust to look after a very important part of your life – your present and future financial wellbeing.

Before choosing to do business with a financial adviser you should ensure you are entirely confident they are the right fit for you, both in terms of their business model and their personality.

After you decide you need advice and find a potential adviser, it's time to get to know them.

In this guide, we set out 10 questions you should ask a financial adviser before becoming their client. If you are satisfied with their answers, you can feel more confident signing on the dotted line.

1. How will you be paid, how much, and how often?

Adviser charges can be confusing and convoluted – and at worst, misleading. Some advisers will charge you a single one-off sum at the beginning, and then a smaller percentage every year for ongoing service – but they must be able to demonstrate that they're providing you with advice on an ongoing basis to justify this. If you just want a one-off piece of advice you shouldn’t be paying an ongoing charge. 

Some advisers are also paid by product providers for selling their products – although commission was banned several years ago on investment products, some financial products still pay advisers in this way. Make sure you have a very clear picture of when they’ll be paid, how much, for what, and by whom.

Also, keep in mind that if the adviser gets any kind of incentive for selling products or making transactions, they could be more likely to pressure you into buying something you might not need.

Find out more: adviser charges

2. What does your fee not cover?

Sometimes the fee will cover the advice only, with the adviser levying another charge for implementing his or her recommendations – buying the products for you. If you’re paying for an ongoing service this might take the form of annual reviews, but might not include ad-hoc valuations or requests for information in between. 

Ask what other pieces of work would incur additional costs. Another example is if your adviser moves your investments into an Isa each year. Would this incur extra charges or just fall under the scope of the ongoing service?

3. What are your qualifications?

First of all, make sure anyone claiming to be a financial adviser is authorised and regulated by the Financial Conduct Authority. It may seem obvious, but there are scam artists out there who use the term 'adviser' when they are simply salesmen, or worse. If your adviser is properly authorised and regulated then, although it won't guarantee you good service, at least it means you have recourse to the Financial Ombudsman Service and Financial Services Compensation Scheme should things go awry.

Also ask if they have any additional qualifications. An adviser who has taken extra steps to gain supplementary certificates or sit extra exams may be more capable of helping you evaluate all possible solutions before picking the best one for you. It also shows they're serious about their profession.

Find out more: adviser qualifications

4. Are there any areas you cannot advise me on?

This will help avoid any unpleasant surprises. If you have an idea of future services you might need, it would be good to ascertain early on if the adviser you’re thinking of using can’t provide them. An investment adviser might not give recommendations on insurance or mortgage products, for example.

5. Do you work from a panel or do you have access to the entire market?

In other words, are you restricted or independent? This is a crucial question. Some advisers will only look at a limited panel of providers, meaning they won’t evaluate the entirety of what is available. This means they are ‘restricted’, rather than ‘independent’ advisers. An independent financial adviser (IFA) will be able to look at the entire marketplace before making a recommendation, meaning you can be more certain you’re buying the best product for your circumstances. Being restricted isn’t necessarily a deal-breaker though – some restricted advisers will look at the entire market but for a limited range of products. If your needs fall within their scope, you’ll still be advised on what’s available – although if your needs fall outside their scope they might not be able to give you as complete a recommendation.

Find out more: different types of adviser

6. How often will I see or hear from you?

If you’re paying an ongoing charge you should be receiving an ongoing service. This might include an annual meeting, or at least periodic phone conversations or Skype chats. 

But on the other hand, if your needs are relatively straightforward, you might not require multiple meetings per year, or even annually. If you’re paying extra for these meetings you might be better off with a less expensive, more hands-off service. This leads us nicely into the next question.

7. Do I have to have an ongoing service or can I opt for a transactional service? And, if I don’t take ongoing advice, will the advice be different?

Advisers will often offer different levels of service for different prices, often depending on the complexity of their clients’ needs and likely tied to how much money the client has to invest. If your needs are fairly basic then you might not want to pay for annual meetings. But then again, if you are investing in stocks and shares, someone will have to periodically re-balance your portfolio – and if you’re not going to do it yourself then it might be worth paying for an annual review.

8. How will you assess if I am on target to meet my objectives?

Your adviser should be helping you reach your financial goals – be that retirement planning, buying a house, or just having a financial safety net in place. A big part of this will be demonstrating how you are progressing towards that goal – even if it means telling you when things go wrong. This can take the form of investment growth or cash flow modelling, and should be presented in a way you can understand. Remember that investments go up and down, so a year of bad performance does not necessarily mean you’ve been given bad advice – as long as the adviser hasn’t sold you too risky a product.

9. How many clients do you personally serve, and what is the average portfolio size?

If an adviser has a lot of clients, it could mean he or she is really popular – but it could also mean they are spread too thin to spend a lot of time paying attention to you. If you have a relatively small portfolio it’s possible they might dedicate more time to helping their larger clients – especially if they charge a percentage fee.

10. Tell me about your best and worst client experience 

What do you like about working with the good clients and what makes the relationship successful, and what went wrong with your worst clients and how was it handled? This is more to help you get to know your potential adviser’s personality and values. It’s also a question that is hard to respond to with a rehearsed answer. It should give you an idea of how the adviser deals with clients and what he or she is willing to do or not do.

With these 10 questions – and others that you come up with yourself – you should be well-equipped to figure out if an adviser is right for you.

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Last updated:

July 2016

Updated by:

Michael Trudeau

Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.