How to pick winning advice

23rd October 2017

The Author: David Cooper
Financial strategist, investment adviser and Sales Director for United Advisers

Many people find that, when it comes to planning and investing for the future, they could use a little help; usually this comes in the shape of a professional adviser.  But how do you know whether your adviser has your best interests at heart, or is giving you the best advice for you?

When it comes to Financial Planning, everyone is different and, what’s right for you and your family, may not be right for your neighbour. In short, there’s no one-size-fits-all solution for Financial Planning and Investing.

What do you expect from your Financial Adviser?

Good financial advice? Emotional support? A firm but gentle hand when you’re tempted to sell at the wrong time?

Your financial adviser should be all that, and more.

While certainly not meant as an exhaustive list, here are a few pointers we think worth considering when trying to identify a winning Financial Adviser.

Understands, and cares about, what you want to achieve.

Taking time to understand everything about your lifestyle now, what you want to achieve in the future, and at every stage of your life, is essential to giving the right advice.  In fact, if your financial advisory does not do this then, in all honesty, they have no right to talk to you about your money!

A good adviser will sit with you to identify your goals and aspirations, as well as your cash inflows and outflows.  He or she will work with you to ensure they thoroughly understand your situation and the purposes behind your goals, whether they are making provisions for retirement, a holiday home, your children’s’ education, or your daughter’s wedding to name but a few life choices.

Ensures investment choices are driven by, and relevant to, your goals and your Life-plan.

Many financial advisers will just sell you a financial product whether or not it’s relevant or suitable to your circumstances!

A good financial adviser won’t do this.  In fact, a good adviser will only sell you a financial product if you need one, and if it meets a requirement identified in your financial plan and is called for to help you realise your goals.

To do this, once your adviser has got to know you and your circumstances, he or she should prepare a financial plan for you, and take the time to go through it and agree it with you.  The financial plan should feature your personal data and, front and centre, your goals and aspirations.

Once you have your plan and have agreed on any shortfalls your plan identifies as areas that may need addressing, only then should your financial adviser propose a product, or suite of products, that you may wish to use to address these issues.

Talks to you about risk, and tries to educate you about investment

Whether we like it or not, investing carries risk; the amount of risk varies according to the investment, but there will always be a degree of risk involved.

A good adviser will talk openly about the risk involved with any scenario or portfolio and, wherever possible, attempt to minimise the risk you are exposed to.

A good adviser will talk patiently, and in detail, about your investment options, without lapsing into incomprehensible financial technobabble or ‘investment speak’. Your adviser should want you to understand everything about your portfolio rather than trying to keep you in the dark.

Meets regularly with you to discuss your future

The life-blood of a good Financial Plan and the essence of a relevant Investment Portfolio is to make sure they’re always up to date and in line with your goals.

A good adviser will meet with you regularly to ensure your plan is on track and appropriately tweaked to make sure it remains pertinent as life develops its regular and inevitable wrinkles, and that it can cope with the occasional (but equally inevitable) ‘spanner in the works’!

Although your regular meetings should undoubtedly contain an element of ‘reviewing’ progress, it should focus more on forward planning; after all, while we can’t change the past, we can plan for the future.  Make sure, therefore, that your financial adviser primarily focusses on your future, rather than dwelling on the past. He or she should also meet with you to talk about your future at least once a year.

Talks openly about fees

Historically, fees associated with Investment advice and Investment products have been shrouded in ‘smoke and mirrors’ and, to a greater or lesser extent, depending on where you are in the world, legislation has generally attempted to ensure greater transparency in this area.

Just like any other service provider, a financial adviser needs to make money and may be remunerated in a number of ways. Some may earn commission based on the investment products or underlying investments; some may charge a fee based on the work they do or calculated as a percentage of your investment portfolio; while others may be paid using a hybrid Commission-fee model.

To a certain extent, the method by which an adviser is paid could be viewed as superfluous here.  The important thing is that, however your adviser is paid, a good financial adviser will be open, honest, and transparent when it comes to discussing and documenting the fees you pay.

At United Advisers, we like to think we satisfy all of the above and more, but if you’d like to put us to the test, please don’t hesitate to contact us for a consultation.