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. Just because someone appeals to us as an individual doesn’t mean though that they are the right person to give us advice and this is particularly relevant in the area of personal financial advice. 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.
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. 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. 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?
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/ . 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 it is likely 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.
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 .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.
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.
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.
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