A financial adviser can help you make important decisions about your finances, but the more prepared you are before your first meeting, the more you will benefit. Here are some questions to ask.
If you decide to see a financial adviser, especially if it is your first contact with them, you should make sure you have a plan in place. Make sure you:
- pull together your relevant paperwork
- think about your financial goals
- prepare a list of questions to ask
An adviser will want to know what products you have and your current financial position. They will also want to know 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. Find out what else an adviser might ask you.
It is your responsibility to make sure the adviser you meet is the right one for you, and offers the products and services you are looking for. To help you get the most out of your first meeting, here are a few key questions you should ask.
Are you approved by the FCA?
The adviser should be regulated by us through the financial services firm they work for.
You can check the Financial Services Register to make sure the firm is authorised.
Please note, the FS Register has undergone some changes. Now, an individual adviser who is an employee of a financial services firm will not necessarily appear as active on the FS Register.
Under the Senior Managers and Certification Regime (SM&CR), we will be publishing and maintaining, on the FS Register, the details of individuals who are certified and assessed by their firms, so you can check the details of advisers working in financial services. Find out more.
What experience and qualifications do you have?
Advisers must be qualified at Level 4 or above on the Qualifications and Credit Framework (equivalent to the first year of a university degree).
They also need to have an annual Statement of Professional Standing (SPS).
You should check that your adviser has these qualifications and this statement.
What type of advice do you offer?
Financial advisers can offer independent or restricted advice.
Independent advice means advisers can consider and recommend a wide range of products and providers. Restricted advice means advisers are limited to certain products, providers or both.
Your adviser must clearly explain if they specialise in certain areas, such as shares, funds, units, insurance products or anything else, and the providers they look at.
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 your first 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. They will have to tell you upfront how much their service costs, so you understand how much you will pay.
Some advisers will only be paid if a transaction takes place. They should tell you if this is the case.
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 need 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.
What services do you offer?
Asking the adviser this question will help you understand whether they are the right adviser for you.
The services that 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 your investment needs and recommend a plan to help you meet your financial goals.
Most advisers also offer an ongoing service. These services will vary but often include a regular meeting and review of your investments.
The nature of the services will not only be important to help you make a decision, but may also affect what your adviser might ask you.
For some specialised areas (such as transferring out from a defined benefit pension scheme) advisers may not have the necessary qualifications to provide all the advice you need.
If this is the case, they may outsource some of the advice to another firm. They should tell you if they operate on this basis and how they share information with other firms.
Do you offer an ongoing service and how much does it cost?
As well as providing an initial recommendation, some advisers offer an ongoing service.
For example, this might include an annual review to check the value of your investments and consider any changes to your circumstances.
You do not have to use an ongoing service if it is offered.
You should consider what this ongoing service includes and whether it is something you value and want to pay for.
If you do decide it is right for you, you should ask exactly what the adviser will do and what it will cost you. Services and cost can vary between advisers.
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.
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 recommended a particular plan or product.
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, but this may not be the right 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.
Who will look after my advice?
You should ask if your money will be managed by the adviser you are meeting, or if other advisers may advise you in the future.
You could also ask what will happen if the adviser leaves the company or retires.