Finding the right financial adviser may involve meeting a few of them before you find the right one. Asking the right questions can help you identify the ones that are not only well qualified and experienced, but also those who have the right approach and personality to partner with you.
If you know any of the adviser’s clients, you can ask them about their experience dealing with the adviser.
Your best bet, however, is to check the adviser out yourself. The way the adviser answers questions will give you either a sense of comfort or unease that should ultimately guide your decision on whether to use them or not.
Here are some questions to help you identify the right adviser:
To assess if you are the kind of client the adviser consults:
- Who is your typical client?
- Do you only take on clients with a certain amount to invest / or those earning a certain amount a year?
To assess their qualifications and experience:
- What qualifications do you have?
- What experience do you have?
- What areas of financial planning do you specialise in?
- How do you keep yourself up to date with the latest products, regulations and financial advice?
- How do you do a due diligence on the products you recommend and how often do you do these checks?
To assess the answers you get, read: How to find a good financial adviser?
To determine their independence and whether the advice is backed by a sound business:
- Are you licenced to give advice or are you giving advice on a financial service provider’s licence?
- If you are operating on another provider’s licence, are you employed by the provider or operating on a franchise licence?
- Are you working under supervision?
- Who takes responsibility for the financial advice you give me?
- Do you, or your practice, have any interests in any financial services providers?
- Do you, or your practice, own any financial products?
- What would happen if you were no longer able to practice or you sold your practice or share in it?
To assess the answers you get, be sure to read: What should I know about the different types of financial advisers?
To determine the range of services and products on which they can give you advice:
- What services do you and your practice provide?
- Which insurers and investment houses’ products can you recommend?
- Are you incentivised to recommend / sell any products?
- How many quotes will you give me for any products I need?
- If I have existing products with other insurers or investment houses will you review them?
To assess the answers you get, be sure to read: What should I know about the different types of financial advisers?
To determine the level of service you will get:
- How often will we meet and can I contact you at any time if I have any problems or life changes?
- Do you have a written service level agreement?
- Do you offer financial coaching or lifestyle financial planning?
- Can you help me with my budget and / or debt?
- Will I be working only with you, or will I at times deal with a paraplanner? Will I be introduced to any other advisers within this practice who can help me if you are unavailable?
- What aspects of financial planning do your outsource? Can you assist with a will, medical scheme cover, short term insurance and tax, or do you work with professionals covering these aspects?
To assess the answers you get, be sure to read: What can I expect when I meet a financial adviser? and What should I know about the different types of financial advisers? and How do I find an adviser who is right for me?
To determine the cost of the advice and the products recommended:
- How do you charge for your services and why?
- What will your services cost and how will I pay for them?
- What do you do to lower costs on the products you recommend?
To assess the answers you get, be sure to read: What should I expect when I meet a financial adviser?
To test the adviser’s integrity:
- Have you been sued or are you cited in any legal action?
- Have you ever been taken to the Ombud for Financial Services Providers or FAIS Ombud and what was the outcome?
- Do you have professional indemnity insurance and does it pay compensation to clients or only cover your legal costs to fight cases brought against you?
- Do you have an independent compliance officer?
- Do you belong to an industry body with a code of ethics?
- How can I be sure you will act in my best interests?
- How will you prove the products you recommend are right for me?
To assess the answers you get, be sure to read: What should I know about the different types of financial advisers? and How can I find a good financial adviser?
To test how the adviser deals with investments:
- What investment platforms do you recommend and why?
- What fee discounts on unit trust funds will I enjoy if I use the platform you recommend and what will the total investment, advice and platform fee be?
- Do you select the investments yourself or do you use a discretionary investment manager. If so which one and why?
- If you are selecting investment managers or funds, what guides your investment choices?
- Do you make use of or recommend passive investments to reduce costs?
To assess the answers you get, be sure to read: What should I know about the different types of financial advisers?
Sources
SA Independent Financial Advisers Association (Saifaa) Ultimate 21 questions
ASISA Foundation Financial Advice
