When markets are buoyant, and investment returns are as expected, it’s unusual for investors to dig deep for information when it comes to choosing a financial adviser. When markets are more challenging, there tends to be greater scrutiny of fees, practice and investment style. Julian Broom, our Chief Investment Officer, explores the tricky questions it’s always important to ask when considering both your investments and the firm you are selecting to manage them.

What are your qualifications? How long have you been advising clients?
These questions help you get under the skin of the adviser’s ethos. There are of course industry standards you’d expect them to hold but it’s always useful to see if the adviser has gone one step further by ensuring a programme of continuing professional development for staff, or working towards voluntary standards too.

Do you only recommend products from one company or a range? Do you earn more by recommending some products over others? On what basis do you select funds and fund managers?
Some advisers could be tied to particular providers. Others may offer advice on an independent basis to provide unbiased, unrestricted advice based on a comprehensive and fair analysis of the relevant market. There may be products or schemes which the adviser could consider to be unsuitable for clients which might be excluded by due diligence. It’s also useful to know if the adviser works with other agencies or market intelligence tools to choose funds and track trends.

How do you charge? Do you have different fees? Is there a maximum amount? Are there upfront fees? What are these and why do you charge them?
It’s important to properly understand how you might be charged. Some firms charge by the hour for some work. There may be a management fee structure based on the size of your investment portfolio. It’s useful to understand when and how fees are charged, and also when they are likely to be reviewed.

How much money would I be prepared to lose in a significant market crash? What are the returns over the short, medium and long term? Your adviser should be able to offer clear insight into different scenarios – from good to bad and everything in between.

We always encourage investors to ensure their financial planning investment strategy is aligned with the risk they can tolerate. Please get in touch should you want to discuss further.

David Pugh, Chief Commercial Officer

This entry was posted on Wednesday, 5th February 2020 at 2:49 am and is filed under Financial Planning. You can follow any responses to this entry through the RSS 2.0 feed.

Tags: ethics, financial planning, qualifications, standards