16 questions to ask when choosing a new financial planner

16 questions to ask when choosing a new financial planner

Finding the right financial planner means asking lots of questions. The more information you can gather before making your decision, the more confident you will feel in creating a life-long relationship with that planner and their firm.
This week, I will be focusing on the top questions you should ask a financial planner, to make sure that they are qualified, experienced and capable of dealing with your own situation.

1. “Are you authorised and regulated by the Financial Conduct Authority (FCA), with suitable PI insurance in place?”

If the answer to both questions isn’t: “Yes and yes” you should simply walk away.
Never take financial advice from anyone who isn’t FCA regulated and PI insurance is vitally important if something should go wrong.
You can check an adviser is authorised by entering their details into the FCA register, which you can find by clicking here.

2. “How would you describe your approach to financial planning?”

A financial planner should spend time finding out about you, your beliefs and the goals you have for your life. They should then examine the progress you have made to date. Only after completing these two stages can they produce a financial plan helping you get from where you are, to where you want to be.
If they seem in a rush to talk about financial products (pensions, ISAs and so on) be wary.
Furthermore, finding out how the financial planner feels about managing money will tell you a lot about how you can expect your own assets to be taken care of and the options they are likely to suggest.

3. “How often do you schedule reviews and progress updates?”

You need to know how often to expect updates and how involved your financial planner will be.
Financial planning is not a one-size-fits-all solution, it must be tailored and adapted over time, to reflect the changing circumstances in your life.
A good financial planner should hold these catch-up sessions as often as you feel they are appropriate.

4. “Who will I be talking to when you are not available?”

If a situation requiring your financial planner’s attention arises, you need to know that you will be able to talk to someone who knows about you, your family and your circumstances, if they are not around.
You should not need to recap the details of every meeting over the phone in a financial emergency. You need to know how many support staff are available and be confident they are well briefed.

5. “Do you have clients with similar needs to my own?”

It’s one thing to know your financial planner holds the relevant qualifications, but you need more than that. You need to know that your financial planner is experienced in dealing with clients who have similar circumstances and requirements to your own.
Asking what the outcome was for those clients and how they are doing now, will give you confidence that the financial planner has the knowledge, skills and experience you need.

6. “How would you define your typical client?”

Different planners have different target markets. You need to find one who has the knowledge you need.
A financial planner who spends most of their working day handling cases which are different to yours will have adopted skills and styles which may not suit your profile.
If the planner has developed a practice working with, for example, people who need a mortgage and you have a large lump sum to invest, they may not be the planner for you.

7. “Do you work on an independent or restricted basis? If it is the latter, what is the nature of the restriction?”

‘Independent’ financial planners can offer products from across the whole market.
As the name suggests ‘Restricted’ planners will have some form of restriction placed upon them; either in the type of product they can recommend, or the provider.
There’s no evidence to suggest that an ‘Independent’ planner will produce a better financial plan than a ‘Restricted’ planner; or vice versa. However, it is important to understand the nature of the restriction and how it might affect the products and services they can recommend to you.

8. “How do you handle communication with other professionals whose services interlink with your own?”

As part of the financial planning process you may find yourself needing the services of a lawyer or accountant.
Ideally your financial planner will work together with any other professionals who are required.
It’s important to check that your planner is used to doing this, and if necessary, that they can recommend other professionals.

9. “Can I see an example of a financial plan you have created?”

Whilst every financial plan will be different, it is great to be able to get a sense of what to expect from your planner.
Ask to see a sample report, with any confidential information removed, so you can see that the style is right for you. Is information presented in a way which you understand? Does it use plain English rather than jargon? Does it provide enough detail without being unnecessarily lengthy?

10. “How would you approach a client with multiple financial objectives?”

Although you might only have a single objective at the start of your relationship, your needs may become more complex over time. So, make sure that you choose a planner who can handle complicated cases.
You need to be confident that your planner can cope with whatever life throws at you, and them. Changing financial planner in a time of crisis is not a good idea.

11. “How many meetings can I expect before we have a plan in place?”

Again, it’s all about knowing what to expect.
Understanding your objectives, researching existing pensions, savings and investments, and then producing a financial plan takes time. Exactly how long is difficult to say. Too quick and things may get missed, too long and you could get frustrated.
Agree timescales when you engage with the adviser and ensure that he or she sticks to them.

12. “How would your existing clients describe the atmosphere of the firm?”

The opinions of existing clients can tell you a lot about the way a firm makes its clients feel.
However, be mindful that you are asking a representative of the firm itself, so they are likely to tell you how they try to make clients feel, rather than how clients have responded.
You can get client opinions and feedback from sites such VouchedFor. It may be worth comparing the planner’s answer with the client reviews online.

13. “What makes this firm different to the competition?”

Probably the hardest question for any financial planner to answer.
Find out what sets this firm apart from the crowd and what they can offer you that the others can’t.
Look for specifics, which relate to your circumstances rather than vague platitudes.

14. “Is the firm involved in any local causes?”

You learn a lot about a company from its charitable activities. Whether getting involved in the community is important to you or not, the actions of your chosen firm will represent the way they view the world and what they are doing to make it better.

15. “What external support do you have in place to check your advice?”

No man (or woman) is an island.
Every financial planner should be prepared to accept, and indeed welcome, outside scrutiny of their work.
Be wary of a financial planner who doesn’t voluntarily submit their work for peer review. How do they know what they are advising is correct and up to date?

16. “What are your fees and how are they structured?

Deliberately last on our list, as we believe there are so many more important things than fees in choosing the right planner.
Financial planners charge for their initial advice in a variety of different ways, including:

  • a fixed or capped fee;
  • an hourly rate; and/or
  • a percentage of the amount you invest.

If you then decide to take ongoing advice this will also need to be paid for.

The fee needs to be fair, reasonable and competitive. But above all, it needs to deliver value for money and move you closer to achieving your financial objectives.

Focusing too heavily on the price, and not the value, is a mistake.

Have we missed any?

These are my top 16 questions to ask a prospective financial planner.

However, I’ve no doubt there will be others.

Drop me a line, I’d love to hear about others you think are important. And who knows, there might be enough for another blog!

Please note

The value of your investment can go down as well as up and you may not get back the full amount invested.

Leave a Reply