It is important to consider the criteria your adviser must meet prior to committing to their service and accepting their advice. The following areas should be taken into account,
Is the adviser Independent or is a third party influencing the advice?
Your adviser should act as your agent and every action taken should be to your sole benefit. Your adviser should have no conflicts of interest, no contractual ties and no restriction as to the products that can be provided. Without independence there will always be third party interference.
How well qualified is this person? Do you trust the advisers technical ability?
Introduced in 2006, the title of ‘Chartered Financial Planner’ has quickly become the premier title for the professional financial advice sector. It is only available to those that have the Advanced Diploma in Financial Planning (APFS), have the relevant industry experience and adhere to a strict code of Ethics and Conduct. The only status higher than that of Chartered Financial Planner is Fellowship of the Personal Finance Society (FPFS), which requires additional qualification standards.
Will the adviser commit to an on-going service? Do you believe him/her?
Life rarely stands still and your finances will often reflect this. When change occurs the suitability of your financial plan can alter and your adviser should be available to consider such change. An adviser who commits to meet regularly, and at your request, and who commits to maintain high levels of service can make sure that you are always both aware of, and prepared for, any change in circumstances.
Will your adviser be around when you need them most?
When appointing an adviser to work with you and your family, it is important to know how long they intend to continue advising. If your adviser retires at the same time as you, you may be left vulnerable at the time advice is most needed.
How is he/she paid? Is it clear how much he/she is paid? Is it value for money?
Look for total transparency. Do you pay fees or does the advisor earn a commission? If commission is taken, how much will the adviser receive. If a fee is charged then all commission should be refunded or go to offset the agreed fee.
Are you entitled to ongoing advice and annual reviews and how is this paid for? If you are not receiving follow-up advice or reviews and your adviser is receiving on-going commission then you need to ask what you are getting in return.
Is it all talk? How can you know if he/she will deliver what they promise?
It is easy to over promise and under deliver and a good salesman will make it extremely difficult to detect. You can overcome this by asking to speak to who have experience of performance first hand. Request to speak to a client in a similar situation to yourself and ask the questions which will help you decide if the promises will be delivered.
Does this person understand you and your specific requirements?
Advice should meet your requirements, not the requirements of the average person. Having met with an adviser have they understood your specific needs? Have they asked the right questions and have they listened your answers? Often it’s the response to these questions that provide the best indication as to the benefit you will receive both now and over the longer term.
Can you forge a long-term relationship with this person?
Finally, your adviser is likely to be needed through out your lifetime and potentially beyond. You need to be able to forge a long-term relationship with this person, equally you need to be confident that they can communicate effectively with family members if required. Do you believe the adviser can provide this?