What to ask an adviser

A financial adviser can help you make important decisions about your finances but the more prepared you are when you meet with one, the more you will benefit. See some questions to ask an adviser.

If you decide to see a financial adviser, especially if it is your first contact with them, you should plan in advance by pulling together your relevant paperwork, thinking about your financial goals and preparing a list of questions to ask.

An adviser will first want to understand what products you have and your current financial position, your goals and how you feel about taking risks with your money.

This will help them to recommend a financial plan and products that are right for you now and in the future.

Q1: Are you approved by the FCA?

The adviser should be regulated and approved by us, and you can check the Register to ensure they are.

If you use an adviser who is not approved by us, you will not have access to the Financial Ombudsman Service (FOS) or Financial Services Compensation Scheme (FSCS) if things go wrong.

Q2: What experience and qualifications do you have?

Advisers have to be qualified at Level 4 or above of the Qualifications and Credit Framework (equivalent to the first year of a university degree).

They also need to obtain an annual Statement of Professional Standing (SPS).

You should check that your adviser has these qualifications.

Q3: What type of advice do you offer?

Financial advisers can offer independent advice, where they can consider products and providers from the whole market, or restricted advice, which is limited to certain products, providers or both.

Your adviser has to clearly explain if they specialise in certain areas, such as shares, funds, units, insurance products or anything else, and the providers they look at.

Q4: What are your charges?

It is important to understand what fees and charges you will pay for advice and when you will be expected to pay. Start by finding out if there is a fee for an initial consultation.

You should have the option to pay a one-off fee or you may pay a regular fee if the advice is ongoing. You may also be able to negotiate the price depending on what sort of advice you need.

Advisers cannot be paid commission from your investment by product providers and will have to tell you upfront how much their service costs. This means you can now be sure you know how much advice is costing you.

Some advisers will only be paid if a transaction takes place, and they should tell you if this is the case.

Q5: Can the cost be deducted from my investment?

You will need to agree with the adviser how you will pay for the advice you receive. You will also have to agree whether you want to pay the fee directly or have it taken from your initial investment.

Your adviser may also accept payment in instalments if you have a regular contribution contract with them, but this is not allowed for lump-sum investments.

Q6: What services do you offer?

Asking the adviser this question will help you understand whether this is the right adviser for you. The services firms offer can vary significantly from meeting very simple needs such as investing in an individual savings account (ISA), to holistic financial planning where the adviser will consider all of your investment needs and recommend a plan to help you meet your financial goals over your lifetime.

Also, many advisers offer an ongoing service. These services also vary but often include a regular meeting and review of your investments.

The nature of the services will not only be important so you know whether they are right for you but may also affect what your adviser might ask you.

For some specialised areas (such as transferring out from a defined benefit pension scheme) some advisers may not have the necessary qualifications to provide all of the advice you need, so they may outsource some of the advice to another firm which does. They should tell you if they operate on this basis.

Q7: How do you assess whether a product or investment has the right level of risk for me?

Your adviser should explain what they consider your risk profile to be and how each recommendation or product fits in with this.

If you think you are prepared to take more or less risk than your adviser suggests, ask them to explain how they decided on your risk profile and whether it should be changed.

To ensure their advice continues to suit your needs, you should also find out how you can contact your adviser if your circumstances change.

Q8: How will I receive the advice?

You should ask whether the advice will be given to you face to face, on the phone, via email or in a report.

Tell your adviser if you prefer one way over another and ask if there are different prices for each.

Your adviser should send you an outline of their recommendations, which is usually called a suitability report. Check this carefully to ensure it reflects the discussion you had with the adviser and that you understand why they recommend a particular plan or product.

Q9: Do you offer an ongoing service and how much does it cost?

As well as providing an initial recommendation, some advisers also offer an ongoing service.

For example, this might be an annual review to check the value of your investments and consider any changes to your circumstances.

You do not necessarily have to use an ongoing service when it is offered, but if you decide to it is important to ask exactly what the adviser will do and about the fee involved, as the service and cost can vary between advisers.

Q10: How often should I review my investments?

You should ask the adviser how often they recommend reviewing your investments.

Some advisers offer an ongoing service (see Q9) but this may not be the most suitable option for your circumstances. For example, you may have a type of investment that can be reviewed less often, or when your circumstances change.

Your adviser should explain what the best approach is for you.

Q11: Who will look after my advice?

You should ask if your money will be managed only by the adviser you are meeting or if other advisers may advise you in future.

You could also ask what will happen if the adviser leaves the company or retires.