What to ask when choosing a financial adviser

We all know that finding a financial adviser is easier said than done. A financial adviser can help you with everything from creating a financial plan to managing and building your wealth.

If you are thinking that it’s time to hire a financial advisor then this article that Carl Widger wrote for Sunday Times is something you need to read.

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SIX QUESTIONS TO FIND THE RIGHT FINANCIAL ADVISER
Buying a new car in 2020? You’ve been researching since about June, right? Diesel or Hybrid? BMW or Volvo?

Questions, visiting showrooms, reading online articles, test drives – all before you make the final decision. To drive a car for 3 or 4 years that will depreciate in value.

 

Think about that when you think about who you trust to manage your money and plan for your life goals. Who is going to ensure you are going to be “ok”? Who is helping you to tick off that bucket list?
Choosing your financial adviser is one of the most important decisions you’ll ever make, and hoping they have the answers isn’t enough, you need to be absolutely clear about the questions you need to ask.

So, you’re in a room with a person you’ve never met. This meeting will define the course of your future.

You can ask six questions – what will they be?

 

What does financial planning mean?

It’s a relationship, and a long one at that. It will outlive your job and it may even outlive you. You need to be clear on how this adviser sees your relationship in the years and decades ahead. You will need a long-term financial plan, but will they make sure it’s updated each year to stay on track? Will they maintain focus on your financial and life goals, adapting to any changes in your life?

 

What’s your investment philosophy?

AKA ‘is this adviser right for me?’ It’s important because a really good adviser will have the grace to stand down if you’re not a good fit for each other (where a lesser one may just take the business). Ask about their investment philosophy and the principles that underpin it. If you agree, great – but you don’t have to.

 

What are your fees?

There’s no point in avoiding the issue and they should feel exactly the same. Transparency is essential, so you need to know for sure what this adviser’s fees will look like. All of them. In writing. Get it out of the way now to enjoy a healthy and respectful relationship in future.

 

What’s your succession plan?

It’s going to be a long relationship. What happens if the adviser in front of you isn’t going to be there for some reason? Is there someone else who knows intimately what is happening, someone else who knows what plan you are working towards?

 

Will you always act in my best interests?

If a friend neglects to tell you that your jumpers on back-to-front, they only want to spare your feelings. But if you then go out and address a roomful of people at a conference, your friend’s good intentions really aren’t helpful. It’s not easy to be candid with people, but a good adviser will step up. Sure, they’ll celebrate your successes, but will they tell you when you’re wrong? Will they tell you the truth about your money?

 

What does everyone else think?

When you’re planning your future it absolutely doesn’t matter what everyone else thinks – they’re your goals, dreams and aspirations. But when you’re choosing your adviser, it’s important to learn about existing clients who are working with them and are loving the experience. A good adviser will a) have such clients b) be more than happy to share c) love the question

 

It’s not a battle of wits, it’s a meeting of minds

Whether through fear, unfamiliarity or just not grasping the gravity of the situation, appointing someone to manage your money must never be left to chance. There’s no ‘winging it’ – you need to know exactly what you’re there to learn. But you don’t have to wrong-foot or outwit the person looking back at you across the desk. This isn’t a game of chess or battleships, it’s more like bridge – you’re looking for a partner with whom you can cooperate towards a common aim.
 
Of course, the reality is that you’re free to ask your potential adviser as many questions as you want to. It’s crucial that you feel comfortable with them, so the more you talk, the more you’ll come to understand what makes them tick. Time poor people often do little or no research before meeting a financial adviser. This will mean you will learn little of real value and you will have to trust your gut instinct to make a decision. Boiling it down to six key questions is an exercise in discipline – it distils what you could ask into what you should ask.
 
So, you’re in a room with a person you’ve never met. This meeting will define the course of your future. The outcome depends on the questions you are going to ask. Ask these questions and leave comfortable that you have found the “one” or equally, that the search for a great financial adviser must continue.
 
Carl Widger
Co-Founder & Director

 

Making better decisions

If you’ve enjoyed reading this article, you might be interested in our in-depth look at behavioural biases and how they can affect our financial decisions. You can download Making Better Decisions: Know Your Behavioural Biases in full today. If you’d rather read the report in bite-sized chunks, or you can opt into our email series.