Hands up if you think financial advice is solely for the wealthy. If you’re nodding your head as you read this, you’re not alone.
Until a year or so ago, I assumed that I’d only need a financial advisor if I had my own business, inherited a ton of money or won the lottery. But as it turns out, a financial advisor can help you no matter what stage you’re at with your finances. Whether you want to save a deposit, become self-employed or you’re wondering how on earth you’re going to save for retirement when you have so many other expenses to take into account, a financial advisor will rake through your finances with a fine tooth comb before helping you get where you want to be in life.
Before you jump right in and pay an advisor for their services, don’t be afraid to ask a few questions. Financial advisors are a bit like driving instructors, babysitters and boyfriends; you want to make sure you’ve found the right one before really making a commitment. To help you find your perfect match, I’m about to share 7 questions to ask before choosing your financial advisor. Make sure you read to the end of the post because at the bottom you’ll find out how to book yourself a free hour-long consultation with a financial planner.
1. What are your qualifications?
Before selecting your advisor, make sure they’re qualified to give the advice you need. You’re trusting this person to show you how to get rich; you don’t want to be given bad advice.
The team at the Chartered Institute for Securities & Investment (CISI) recommends asking a potential advisor for a list of their qualifications. Once they’ve shared their credentials with you, see if they’re formally recognised.
The CISI says: “Make sure you have a good understanding of the planner’s qualifications and if, in fact, they are a qualified planner. As such, check if they hold any advanced level professional credentials, such as the internationally recognised Certified Financial Planner TM certification – the global standard of excellence in Financial Planning which is equivalent to an honours degree.”
You could also check out the CISI’s financial planner register filled with approved advisors from across the country.
2. What experience do you have?
Not only do you want to know what qualifications your financial planner has, you also need to know how much experience they’ve gained in their career so far. Feel free to ask how long they’ve been a planner, which companies they’ve worked with and how this experience relates to their current practice.
The CISI recommends that you choose a financial planner with at least two years experience working directly with individuals.
3. What services do you offer?
The services financial planners offer can vary from person to person. Often, their services depend on their qualifications, areas of expertise and the whether or not they work for a particular firm.
Some advisors offer advice covering a broad range of topics from retirement planning to investment advice, while others specialise. There are also advisors who sell financial products and others who don’t.
If your advisor does recommend financial products, ask whether this is an independent or restricted service. Independent advisers have a duty to research products across the whole of the market, while those offering a restricted service may only assess a small number of options.
Also ask your potential advisor if they’ll offer you a detailed financial plan before helping you implement their strategies. Some financial planners will assess your finances, weigh up your options and point you in the right direction rather than guiding you through the process and supporting you along the way.
4. Will you be the only person working with me?
It is quite common for financial planners to work as part of a team to provide an extensive financial planning service to you. Before instructing your planner, ask whether you’ll be working with just one person or a group of experts within the finance industry.
If you’re recruiting a firm rather than an individual, check to see if they’re CISI accredited. This mark of quality can give you confidence that the whole organisation can be trusted to help you improve your finances.
5. How will I pay for your services?
Quality financial advice will cost you, but consider this an investment. If you choose the right advisor, you’ll make this money back in no time at all. Before instructing a particular advisor or firm to help you, ask them to disclose the cost of their services in writing. Don’t be afraid to ask for a detailed breakdown of their services in writing too.
6. How are you regulated?
Advisors who sell financial products such as investments must be regulated by the FCA. Since January 2013, all retail investment advisers must have a Statement of Professional Standing (SPS) from an FCA accredited body such as CISI. Feel free to ask to see this statement and check that it is not out of date.
You can check that both the firm and the individual adviser are authorised by the FCA by consulting this register.
7. How often do you review my situation?
Some financial planners will offer a brief service while others will make sure they review your situation on a regular basis. A thorough annual review can help you continue to build your wealth over a long period of time while adjusting to changing circumstances along the way.