Occasionally I am asked “How do I know that I can trust you?” The posing of the question is not unreasonable when you consider that they may be about to hand over the advice on their investment, pension, life assurance and financing to someone that was, up to a day or two previous, a total stranger!
When you reflect further on those high-profile cases in the media of advisers who have compromised client assets, it is only right and fitting that the issue is addressed. If the adviser cannot prove their bona fides you would be right to walk away. So what bona fides do you need to establish?
In Ireland, all financial advisers usually have two public profiles that can be investigated quite easily. The first is the website of the Central Bank of Ireland which is the regulator for financial advice in Ireland, http://registers.financialregulator.ie/ . Here, you can find out if the business with whom you are dealing with is authorised to deal with individuals resident in the Republic of Ireland. If they don’t appear on this website, you should consider dropping them immediately as there is high probability they are not a legitimate business. Alternatively, if they are a legitimate business it is probable they are not dealing in a regulated product. If true, you will not be covered by the ICCL which is the investment industry’s compensation fund. This fund coverage can be viewed at http://www.investorcompensation.ie/index.php
You also need to be sure that the particular adviser is knowledgeable enough to give you specific advice. While Brokers Ireland (previouslythe Irish Brokers Association and PIBA) supported the concept of “Grandfathering” i.e. allowing those with long service in the financial advice business to be deemed worthy of giving financial advice without having a professional qualification, I would hold a different view.
Put quite simply, at the very least, any prospective client has a right to deal with a Qualified Financial Adviser (QFA) . The QFA qualification, however, is not the only professional qualification that deals with financial advice. The Certified Financial Planner® qualification (CFP) has resulted in the recent generation of the first circa 510 individuals in Ireland who have obtained this worldwide standard and will, I believe, become the new benchmark for financial advice in Ireland.
With effect from 1st April 2020, as a result of an Addendum to the Consumer Protection Code 2020, a financial adviser can only be labelled as an independent adviser if they can provide a “fair analysis” of the financial products available in the marketplace and charge clients fees only for arrangement of financial product. In our own case, because of our long term renewal stream we have decided (as has most of the Irish financial advisory market) to remove references to “independence” from our market profile. This is despite the fact that we have in recent years operated primarily on a fee basis.
Returning to the broad market analysis of financial advisers, you should ask them to send you whatever relevant documentation is needed for you to become a client. The response should be to send you a very detailed terms of business as well as copies of their various regulatory approval documents. On top of this you should also be asked to complete a financial information document, more commonly referred to as a Fact find. If these documents are not quite detailed it is quite probable that they apply a light touch approach to client relationships – not a good sign!
Ask also for a copy of a report that they have provided to previous clients, with the client names blanked out. It is not that you are looking for free advice as everyone requires bespoke advice but it does give you a sense of the quality of information that you are likely to receive.
Finally ask them for a number of client referrals. If they baulk at this, then they are either not geared up to dealing with clients or may have something to hide. If the prospective adviser hims and haws at any of this, then go on your gut feeling, which will probably tell you to walk away and seek another adviser.
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