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10 questions to ask when choosing a financial adviser

Not only should an IFA help clients generate, maximise and secure wealth, they should also be considered a trusted financial mentor over the long-term Nigel Green April 5, 2016: It is almost universally acknowledged that the most effective way for individuals to achieve their long-term financial goals is to seek the help of an independent financial adviser (IFA). Devising, implementing and managing a robust financial...

Not only should an IFA help clients generate, maximise and secure wealth, they should also be considered a trusted financial mentor over the long-term

Nigel Green

April 5, 2016: It is almost universally acknowledged that the most effective way for individuals to achieve their long-term financial goals is to seek the help of an independent financial adviser (IFA).

Devising, implementing and managing a robust financial plan with an IFA is key to reaching sustainable financial freedom. IFAs offer clients advice and planning tips that are tailor-made for their unique objectives, risks and circumstances. An IFA will suggest a specific solution after careful consideration of how it will affect a client’s particular financial situation.

Nigel Green is the founder and CEO of deVere Group

Not only should an IFA help clients generate, maximise and secure wealth, they should also be considered a trusted financial mentor over the long-term.

Consequently, finding the right adviser is crucial,as finances are far too important to get wrong.

I have spent my whole career in the financial advisory sector. In 2002, I founded what is today one of the world’s largest independent financial advisory organisations, operating in 100 countries with $10bn under advice from 80,000 clients.

Using this experience of the industry, I believe that by asking a prospective financial adviser the following 10 questions, you will be on the right track to select the right IFA for you and circumvent any potential pitfalls.

1. Is your company authorised to give financial advice by the appropriate regulatory authority?

The company you are considering should be authorised to give advice in the appropriate area for you.  For example, in the UK, all financial advisers have to be approved or authorised by the Financial Conduct Authority, to ensure they are in possession of the relevant qualifications and meet the necessary requirements. As an example, certain advisers will have designations such as CPA (certified public accountant) or CFP (certified financial planner).

2. Are you an ‘independent’ or restricted’ financial adviser?

Independent advisers are able to offer the full range of available products and services from across the market, and give unbiased, unrestricted advice.

Whereas restricted advisers are only able to recommend certain products or product providers.  They may only choose to focus on a specific market, such as pensions, or only suggest products from a limited number of providers.  As such, restricted advisers cannot define the advice they offer as ‘independent’.

3. What type of personalised service do you offer?  Will you be my main point of contact?

Your chosen adviser should serve as your primary contact person and be actively involved in all decisions regarding your financial future. You should feel able to contact them should you have any questions, and receive a swift response.

Any additional contacts, such as an in-house team of wealth planners, researchers or analysts, must be explained by the primary adviser, so clients know the relevant person to get in touch with should they have any specific queries.

4. Does your company have a global presence?

Working with a financial advisory organisation that has offices across the world is a significant advantage, should clients relocate to another country.  Continuity with regards to matters of wealth management is paramount.

deVere Group has over 71 offices worldwide in major destinations including Dubai, Abu Dhabi, Hong Kong, Sydney, New York, Shanghai, Tokyo, Geneva and London, amongst many others. This enables us to offer cross-border financial advice to our internationally-focused, globally-mobile clients.

Companies should also be fully regulated within every country in which they operate.

5. How long has your company been in operation?

Clients should preferably select an organisation that has been operating for over five years.  This will then provide a far more accurate, long-term view of the firm’s quality of advice, service and regulatory background.

6. What is the total value of the company’s assets currently under management?

Assets under management with a total in excess of $4 billion highlights a degree of critical mass in the financial services industry. It also shows the company possesses a significant share of the market, longevity and a strong organisational structure.

A key advantage to a large organisation with a substantial amount of assets under advice and management is they will be in a position to secure financial products with some of the world’s major institutions.

7. Do you offer full disclosure?

From the moment you start negotiations, advisers should be upfront and fully transparent.  Any agreements discussed between client and adviser should disclose how charges are made, indeed how much will be charged, expectations of service and protection levels.

The main reasoning behind the full disclosure requirement is to ensure advisers provide the essential information clients need to make an informed decision.

This information cannot be in any way misleading, disingenuous or confusing to the client.

8. When it comes to fee transparency, how do you get paid for investments recommended by you?

Reverting back to transparency, which is a key theme when choosing a financial adviser, advisers should be completely clear when explaining their fee structure. This will state what percentage goes to the company, and what is paid out to the adviser.

As a strong client/adviser relationship is built on trust, it is certainly in nobody’s interest to be anything other than 100 per cent transparent on charges from the outset.

Does the financial adviser receive payment through an established fee paid for by the client, or do they get an introductory commission from the financial institutions whose products are being recommended to the client?

For instance, in countries where deVere operates where regulations do not permit commission-based financial advice (such as the US, the UK and Australia), we charge a consultation fee and 1 per cent per year to look after the client.

Whichever way the fees and/or charges are set out, the principal factor is it must be absolutely clear from the beginning.

9. How often do you communicate with your clients? Are you proactive in your approach to client relations?

Advisers should focus on providing pre-emptive communications to clients. For example, notifications should be sent to every client to explain every decision made by the adviser; perhaps a weekly or fortnightly market commentary; investment predictions; and industry updates and stats.

This will help clients better understand the activity in their portfolio and offer peace of mind that the adviser is regularly monitoring their financial situation in a transparent and timely manner.

10. What will happen to my finances if I pass away?  What are the succession planning solutions that will be implemented?

Although not a comfortable talking point for many, it is one of the most important factors that must be put in place should the worst happen.

As such, advisers should have a comprehensive succession plan in place to continue to offer the same level of service and take care of all eventualities. They will be confident in affirming that they will still look after the successors’ wealth management needs.

Taking all the above points into account, the most important thing a good financial adviser can do for a client is to motivate them to take action, and not put off critical decisions.  The successful adviser will do everything in their power to ensure clients reach, and often exceed their financial objectives.

Nigel Green is the founder and CEO of deVere Group

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