Ten things to ask your financial adviser

13th November 2007

Finding a new financial adviser can be a daunting task. We hope you will be able to use the following ten questions (and suggested answers) to ensure that your new adviser meets your needs.

1 - Are you independent?

Until quite recently, there were only two kinds of financial adviser - tied or independent. A tied financial adviser could only advise on products from their own company whilst an independent financial adviser acted on behalf of the client, and was able to access products from the whole market. Recent changes have increased the types of advisers to include independent, whole of market, multi-tied and tied advisers.

Always go for independent financial advice. A single company is unlikely to be the most competitive in all areas of financial planning so the ability to select from every available product/company is a minimum starting point for good financial advice. Multi-tied advisers might purport to represent the 'best' products in the market but they will not have the same level of choice as an independent financial adviser.

2 - How long have you been a financial adviser?

Experience isn't everything, and the back-up and strong support of other IFAs within the firm may be just as important. However, you may have more confidence in an adviser who is not a new entrant to the retail financial services market and has at least some experience under their belt. You can check the background of an IFA on the Financial Services Authority (FSA) register at www.fsa.gov.uk/register.

3 - What qualifications do you hold?

The basic minimum qualification requirement for an IFA is the Certificate in Financial Planning or Certificate of Financial Advice (CeFA). Both of these sets of qualifications are a minimum standard and do not reflect any particular expertise or knowledge. You should shop around to find an adviser who holds the Diploma or Advanced Diploma in Financial Planning (previously known as the Advanced Financial Planning Certificate - AFPC).

For certain areas of advice you should seek an adviser who holds more advanced qualifications. The highest levels of qualification are the Certified Financial Planner licence and, more recently, Chartered Financial Planner status. There are relatively few advisers in the UK who hold either of these qualifications, but they do represent the highest technical standard.

4 - How do you charge for your services?

Always seek an adviser who offers you the choice of paying a fee for their services, rather than working on a commission basis. This is the only way you can ensure complete impartiality. You should request an engagement letter after the first meeting that sets out the services that will be provided and the way these will be charged. Fee-based advice is still often paid for by way of commission that is generated by the sale of a financial product.

5 - Do you have any specialists within your firm?

Very few financial advisers have expert knowledge in all areas of financial planning. Ensure that the adviser can refer you to other specialists within the firm, and that that are willing to do so when needed. They may also need to refer you to specialists outside of their own company for certain areas of advice, and they should explain to you when this would be necessary.

6 - What level of ongoing service do you offer?

The answers to this question are bound to vary from firm to firm. If the adviser is going to be receiving ongoing remuneration for the servicing of your policies, you should expect to receive some service in return. Advisers will offer different levels of ongoing service, and you should ensure that this is agreed in the early stages of your discussions. Some firms charge a monthly, quarterly or annual fee for this ongoing service and advice.

A good quality review carried out once a year almost always makes sense. At a very basic level this should be to update the advisers' understanding of your financial position and to enable them to review any products or investments that you have.

7 - How do you work with other professionals?

A good financial adviser should be able to work closely with your solicitor and accountant. The advice that they provide should compliment the advice from your other professional advisers. Ensure that your financial adviser is comfortable working with other professionals and find out how they will charge for doing so.

8 - Are you a member of any professional bodies?

There are a number of professional bodies that a financial adviser can belong to. These include the Personal Finance Society (PFS) and the Institute of Financial Planning (IFP). Being a member of a professional body will mean that an adviser has committed themselves to following a code of professional conduct and they are likely to be striving towards improving their level of professional qualifications.

9 - Will your advice be focused on one area or will it be a complete review?

You may or may not require a complete review of your financial position. Some people seek financial advice to simply obtain recommendations on one particular aspect of their financial lives. Our own company offers two services - focused financial solutions for people who need advice on one or possibly two financial areas; and wealth management solutions for people who need a holistic financial planning review. Establish exactly what the financial adviser is offering to you in terms of the scope of their recommendations.

10 - How will you keep me up to date with changes in the world of financial planning?

At a very minimum the IFA should offer you a regular newsletter to keep you up to date with financial news and developments. You should also find out of they have an informative website and a blog with regular updates on different areas of financial planning.


Remember that selecting a financial adviser is not a lifetime commitment, but due to the nature of the decisions they will be helping you to make, you should ensure that you ask these important questions and feel comfortable with the answers.

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