There are seven vital questions to ask a financial planner and one big question for you
How do you find a financial planner that is just right for you? There is little doubt that most people can benefit from good advice. These eight questions act as a great checklist to help you find the right adviser.
The seven questions are:
1. What are your qualifications and experience?
All planners need to be suitably qualified to provide personal advice. They should readily provide their qualifications upon request.
Currently there aren’t many qualifications required to be registered as an authorised financial planner. Therefore, to get a real sense to their standard of education you can also ask:
Do you have a finance degree?
What did you study last at college/university?
What training and studies do you currently undertake?
Qualifications are one thing, but you also want to know about their experience. Key questions include:
Describe your typical client?
How long have you been working as planner?
What have you learned most since becoming a financial planner?
If a summary of your skills, values and financial planning beliefs were to appear in tomorrow’s business pages, what would be written?
These questions are simple conversation starters. However, they play a pivotal role in establishing a real sense of who they are and what they do as a financial planner.
2. What is the structure of the company employing the financial planner?
Most planners work for small companies that are operated by the senior financial planner. You’ll want to know if the financial planning company is capable of managing your affairs both for now and in the long term. Key questions to ask:
How long has the company been in operation?
Does it have any outstanding issues such as unresolved client complaints?
How long has the core staff been at the company?
What will happen when the current company owner(s) exit the business e.g. at retirement?
Is the business linked to a major institution and if so, does this create any conflicts?
Investing for the long term may well be investing beyond the working life of the financial planner. You need to be confident that you will be taken care of when things inevitably change. If the company is linked to a major institution, you need to consider if this will create bias in the advice from the financial planner. However, for many investors being linked to a major institution does provide some level of security.
3. What are the benefits for the financial planner by working at this company?
Simply ask – What are the benefits for you working at this company?
They should be able to articulate their answer quite easily. In their answer, you are looking for benefits that find their way back to you as the client. For example, if they say ‘The company provides great facilities and support that allows me the freedom to focus on the client’, that is a good start.
If they are struggling and just rambling on, this would obviously not be a good sign! Worse still, if they say ‘That the company pays the best bonuses in town’, it’s time to move on to the next financial planner.
4. What are the disadvantages for working at this company?
Simply ask: What are the disadvantages of working at this company?
Now this is a tough one, everyone finds it easy to talk about the good but we all know there must be some bad! You are looking for honesty in their answer. If they are honest they will highlight a couple of things such as a restricted range of investments, lack of on-line presence etc.
If they say ‘The business is too strict on its auditing and compliance’, this should start ringing the warning bells. A good financial planner should not be afraid of good compliance procedures and ultimately good compliance is there to protect you as the client.
5. What client experience will be delivered?
Now we’re getting to the nitty gritty. This is why you are sitting in front of this financial planner. You want to know the WIIFM factor (What’s In It For Me). After all you are the one paying the fees and you want a return for your investment in this financial planner.
Just ask: What is the client experience delivered by you and the company?
If the financial planner replies ‘It is all about the exceptional investment returns that I get for my clients’, it could be a good time to leave the office. A financial planner selling future returns is normally selling false hope for all concerned.
You want the planner to highlight that the experience delivered is ‘all about caring for you as their client’. They will be there to help, assist, facilitate, guide and carefully invest your investment funds. You also want them to act like a good general practitioner (the local doctor), by engaging specialists to assist with all aspects of your finances.
A financial adviser that really cares for you will be more cautious and understanding of your situation. They will take responsibility for their actions and work in your best interests.
6. What fees will be charged for the services provided?
You need to know the fees no matter how much they may care for you.
Ask: Can you give me a schedule of fees for the services that you will provide?
The financial planner should also be able to provide the scope of their advice (what they are/are not advising on).
It is important to understand that fees tied to your investment account can eat into your investment returns and of course, you won’t get quality advice and service for free either. Your goal is to fully understand the fees and what you get in return for these fees. This way you can compare financial planners and make an informed decision as to which one is suitable for you.
7. What if something goes wrong?
You need to ask: If something goes wrong and I need to complain, how do I do that?
What have been the company’s experience for complaints over the past couple of years?
Have there been any long running complaints and if so why?
You should be getting a flavour of what really happened with the client complaints. If they stumble on their response, treat it as a warning.
1. The big question for you – Can I work with this financial planner?
The emphasis of this question for you, is to determine if the financial planner is the right fit for you and, are you the right fit for them. You should see your relationship as a two way arrangement. You will need to be very open and honest with the financial planner to enable he/she to deliver the best advice and service.
They don’t need to be your best friend. An error many people make when seeking a financial planner is to select the ‘friendliest’ person that they meet, without judging their ability to deliver the right service.
While you don’t have to like the person, you do need to be able to trust them. Like all good relationships in life, trust will be critical for the relationship to be a success.
If you follow the questions, take notes and consider a n