What an adviser might ask you

A financial adviser should ask you a series of questions to help them understand your circumstances. Find out what these questions might be.

Before recommending a financial plan and products that are right for you, an adviser needs to understand your current financial position, your goals and how you feel about taking risks with your money.

Even if you only want basic financial advice, you will have to answer some general questions so an adviser can understand your needs.

To help you prepare, here are some questions an adviser might ask you. Alternatively, find out what questions you should ask an adviser.

Do you have any dependents, such as a husband/wife or children?

The adviser will need to know about anyone you want to include in your financial plans.

It might be worth asking for any forms that cover this sort of basic information, so you can complete them before you meet the adviser.

You might also have to provide evidence of who you are and where you live – usually your passport or driving licence, and a recent utility bill.

How much money do you have to invest?

Your adviser will need to know how much money you have to invest, either as a lump sum or as a regular payment. This might be a set amount each month.

If you want a protection product, such as life insurance, they will need to know how much you are willing to pay each month.

What products do you already have?

You will have to tell the adviser about any policies or investments you already have and how they are performing.

This should include savings, investments, ISAs, mortgages or other loans, pension provision and insurance.

Make sure you bring up-to-date information about these to your first meeting. The more information you provide, the more accurate your financial plan should be.

How long do you want to invest for?

You should have an idea of how long you want your money to be invested and when you want to be able to access it.

Some products can have a time restriction on access, and there are some that you should be prepared to hold for several years.

What are your long-term aims and objectives?

The adviser will want to understand what you want to do with your money.

This might be to use it to pay for school fees, fund your retirement or to give your children some money for university or a deposit for a home.

What is your attitude to risk?

Generally, the main aim of investing is to make a good return, usually above what you could make in a bank or building society savings account. But there are risks to investing and you could lose money.

You will need to tell your adviser what level of risk you are prepared – or not prepared – to take with your money.

Your attitude to risk will have a big impact on what an adviser recommends to you, so make sure you are clear about and fully understand the level of risk you are prepared to take.

How much can you afford to lose?

This is different from 'attitude to risk', which is what you feel about investment risk.

This question is about what you can afford to lose without it having a material impact on your standard of living. 

The adviser might refer to this as your 'capacity for loss'

The adviser may ask you about this, or they may assess this from the information you provide to them, particularly about your overall investments, debts, income and outgoings.

What is your knowledge and experience of investments?

The adviser must also ask you about your experience of investing. This may include questions about what investments you have made before and how much you know about investments. 

Once they understand this, they will be able to explain their recommendations to you in a way that you are likely to understand.

Transferring out of a defined benefit pension scheme

If you are considering whether or not to transfer out of a defined benefit pension scheme, your experience and knowledge of investments is an important point to consider. 

In your existing scheme, you won’t need to make any investment decisions or bear any of the risks arising from investment markets. If you transfer, you will take on these responsibilities yourself, and you will need to decide whether you are comfortable doing this. 

It is therefore important that you have knowledge of all the risks that could arise. If you do not understand this, or feel uncomfortable with these risks, advisers should not recommend that you transfer.

How much do you need to live on in retirement?

If you are discussing pensions, or approaching retirement, this is an important consideration.

For example, if you are considering retiring from work, then your adviser will want to know how much you expect to spend in retirement. 

They may also need to know how this spending is split between:

  • your essential costs of living – this is spending you would find impossible to cut back on
  • your lifestyle expenses – this is spending that provides the standard of living you expect in retirement and would be very hard to cut back on
  • your discretionary expenses – this is spending that relates to luxuries and savings that would be easier to cut back on

Understanding your expenses should help the adviser recommend the right product or solution to meet your needs.