Irrespective of the professional service that we might look to engage, most people select those who they seek advice from on the basis of a “gut feeling” that the person eventually selected will do a good job. This is no different irrespective of the profession from tradesmen to architects, doctors to engineers and accountants to travel consultants. Such gut feeling is either reflective of someone else’s referral or the fact that there is something about the person’s personality that appeals to us sublimely.
Even still, just because someone appeals to us as an individual doesn’t mean that they are the right person to give us advice and this is particularly relevant in the area of personal financial advice. Getting the adviser that is right for you is essential. Not only should they gel with you on a personal level but they should also be fit for purpose. So here’s a few pointers about what to look out for and what you need to ask or investigate before engaging them:
1. Think beyond what you might feel is your obvious need
Do you have a specific focused need or is your advice requirement more general? In my experience while prospective clients might have a particular immediate need, most have not thought through the need for full personal integrated financial planning. This is probably as important if not more important.
2. Shop around
Don’t just settle on an adviser because he/she is in the neighbourhood or has been referred to you. Talk to a number of advisers and look at their websites. If they don’t have a website it doesn’t mean that they are a poor adviser it just means that they haven’t caught up with technology. Nevertheless, the more switched on an adviser is, the more likely their skill set is kept up to date. For those that have websites, compare the services, the use of language, availability of client resources and their approach to investing. Where the website posts testimonials, research them further – you might actually know some of the referrals.
3. Do they have a speciality and how do they work?
Again, a website might give you this information but nothing beats at least talking to the adviser either by phone or by way of a discovery meeting. You can get a sense of how they work and what tools or processes they use. Are they a broad based general practitioner or are they just focused on a specific product type? Do they engage in a financial planning approach by producing Personal Worth Statements, outline tax computations and lifetime cashflow analysis? If not, why not? The better advisers will look to use every piece of financial information that you give them to build up a foundation picture of you before proceeding to advise you.
4. Are they authorised by the Central Bank of Ireland?
The best way to find this out is to check the specific business name and its specific address on the Regulators website which can be accessed at http://registers.centralbank.ie/ .
If you are at all concerned about the party that may be offering you advice at the moment and cannot find them on the Central Bank’s main registers you can check out the Regulator’s “Unauthorised Firms List” to make sure that your potential adviser is not listed there either.
http://www.centralbank.ie/regulation/unauthorised-firms/Pages/list-search-unath.aspx. Unauthorised Firms are most likely highly suspect and should be avoided at all costs. If you cannot find any reference to the advisor on any of the list, stop dealing with them immediately as otherwise you are most likely dealing with a scam artist!
5. What products can they advise on and how does the adviser get paid?
Ideally any prospective adviser should offer you the choice of being remunerated by way of fee or commission from a product, but preferably they should charge a fee only for their advice. If an advisor seeks payment only from commission then you might want to obtain substantial information on why one product might be recommended over another. If an adviser is specifically promoting a particular product or investment fund, especially through the media, it is most likely that they have a vested interest and this will most likely shape their opinion on a particular approach.
6. How qualified are they to give financial and investment advice?
While it is preferable for a financial adviser to have a minimum standard of the Qualified Financial Advisor (QFA) quite a large number of advisers in Ireland do not actually hold this qualification. This is because their representative bodies have lobbied successfully for those with long service in the industry to obtain an exemption even though they are still obliged to attend minimum competency update sessions.
Nowadays, however, there are a small but growing number of accredited Certified Financial Planners™ and Chartered Financial Planners who have upskilled considerably their own technical and professional skills far beyond the QFA level. This list can be viewed at www.fpsb.ie This being said, the list contains individuals who may have obtained the Certified Financial Planner™ accreditation but who do not actually give direct advice to the public. Typically such inactive CFPs work for life assurance companies as representatives marketing product to the advisory market rather than advising members of the public. In addition, some CFPs act in a tied capacity for insurers or banks selling a particular financial institution’s product.
In this regard you might like to know that in January 2013 The Society of Financial Planners of Ireland was formed specifically to raise the professional standards of personal financial advice in Ireland. The members of this organisation who are allowed to appear on their public register not only hold the qualification of Certified Financial Planner™ but also operate separately from financial institutions, give a choice of paying fees and are capable of producing very detailed financial analysis such as the aforementioned Personal Worth Statements and Lifetime Cashflow Analysis.
Furthermore they are more likely to deal with exploring personal needs and will challenge you on issues such as Wills, Enduring Power of Attorney and Personal Taxation matters. It’s not that they are specialists in these latter areas (but some are) but it is primarily because they have a broad enough approach to know that the most important issue is the needs of the potential client rather than the shoehorning of a particular financial product to a potential sales target.
7. How does the adviser research the marketplace?
There is a huge range of information that financial advisers need access to and advisers who are not tied to financial institutions should show you comparative quotes as part of their recommendations. Ask what they use and how they are used. Examples of these IT based tools are Best Advice, Clear Choice, Voyant Financial Planning, Moneymate and Financial Express.
8. Which financial institutions do you deal with on a regular basis and why?
A good financial advisor should have agencies with or at least be able to form an opinion on particular insurers, banks, investment companies and other providers as well. They should also be able to offer basic advice on the full range of investment, pension, protection, mortgage and deposit account products.
If your potential financial adviser does not pass these filters then you should probably go back to the drawing board and begin the process again. There is no point in engaging a person to do a professional financial advice role unless they are up to the standard. After all, it is your money we are talking about!