Entrusting an adviser with your life savings or your children’s inheritance, without any shadow of a doubt, is a decision that most people do not take lightly, and certainly not without carrying out some level of due diligence.
Often a referral is how many find themselves working with the adviser, but there are lots of people who essentially need to ‘start from scratch’ and rely on other resources, such as the internet to find their adviser.
The internet is a good place to start, but we’re all aware that the internet can contain some rogue information. I would therefore suggest that once you’ve identified a potential adviser, the next step is to carry out formal enquires with the Financial Conduct Authority (FCA). This will enable you to confirm that your prospective adviser is fully registered and authorised to provide the type of advice you require.
You may have an idea as to the type of person you may want to work with, and meet with some advisers, until you find a match that feels right to you. Finding a match is as much about personal chemistry as it is about financial philosophy.
To help, the tips below can be used after talking to an adviser to assess their suitability, and could greatly increase your chances of finding the adviser that is right for you:
1. What was your first impression of the adviser?
Were they personable and respectful? The individual’s personality is a good indicator of the kind of service and attention you can expect to receive throughout your long-term working relationship.
2. What kind of questions did they ask you?
Did they ask you more about your money or the size of your portfolio or more about your circumstances, life scenarios and goals? A combination of both in my opinion signifies a good adviser.
3. Did they demonstrate good listening skills?
They should be able to carefully summarise your goals and any concerns you may have.
If you get the feeling you’re not dealing with a good listener, move on. If the adviser dominated the conversation, they may not be right for you.
4. Did they explain matters in a language you can understand or just use jargon and talk over your head?
In my mind, the mark of a good adviser is one who has the ability to make complex matters seem simple and understandable. A good adviser will also be a good teacher and will help you improve your overall financial wellbeing and understanding.
5. Is the adviser willing to disclose their own personal holdings?
If a financial adviser is trying to sell you something they don’t own themselves, you should want to know why. If you find an adviser who does for their clients what they do for themselves, you have a much greater potential for trust.
6. Do they articulate a clear philosophy regarding investments and wealth management?
Rather than following the investment crowd, the recommendation should suit your personal circumstances.
You should be offered an investment that the adviser has researched from the whole marketplace to make sure the investments suit your own needs and circumstances.
7. Ask how and why they got into this business
The adviser should be on a mission to help other people rather than just to help themselves!
8. Ask the adviser about their Statement of Professional Standing (SPS)
This will highlight that the adviser adheres to a code of ethical standard and holds the required qualifications for the advice they undertake.
If you walk out of an interview satisfied that these bases have been covered, I believe you have a greater chance of partnering with a suitable adviser.
You want to find out what the person’s motives are. After taking him or her through the preceding questions you should have a fairly good indication.
But, in addition to the above and checking the FCA register and Statement of Professional Standing’ (SPS) as recommended by FCA guidance should still be followed.
It simply comes down to finding someone you believe you can trust and someone who can demonstrate they want the satisfaction of helping you reach your financial goals.
The Financial Conduct Authority does not regulate taxation and trust advice.
The value of your investments can go down as well as up and you may not get back the full amount invested.