NOTE: This post is more than 12 months old, and the information contained within may no longer be accurate.
Alistair Cunningham
This is the 2018 version of a resource that used to be downloadable from the website. A typeset version will follow.
What level of qualifications do you hold?
Chartered Financial Planner is considered to be the gold standard for financial advice, there is a tool to find them on the CII website here. It is possible to be qualified as a person (Chartered Financial Planner) or a firm (Chartered Financial Planners), or both.
Definitions
- Certificate: equivalent to an A-Level, and the level of minimum qualification, prior to 31st December 2012
- Diploma Dip(PFS): is the most basic to be compliant post 1st January 2013 and equivalent to an HNC, or 1st year of an undergraduate degree
- Chartered (or Certified) Financial Planner: the equivalent of an undergraduate degree and other professional qualifications i.e. Chartered Accountant or Solicitor (LLB)
- What additional qualifications do they hold, and what do they mean? Clearly those relevant to you are the most valuable
CV
- How many employers have they worked for in the last 10 years? Where there has been a high turnover – what was their reason for leaving?
- Have they ever been disciplined or worked for a firm that has failed, and if so why?
- Of these, how many are direct sales forces (e.g. Banks, Insurers and St James Place) vs. true IFA/Financial Planning firms?
- What happens if you leave your current firm?
Fees and services
- For how long have you operated a fee charging (as opposed to commission oriented) service model?
- How are fees calculated? (some will be time-cost, some a fixed fee, and some a %age of assets under advice, there’s no ‘best’ answer, just what suits you)
- When are the fees due? (be careful with firms doing large amounts of work for ‘free’, a report that is issued on the expectation that implementation of the report would lead to a fee, but that is not chargable in isolation may be little more than a sales aid, and it is hard to avoid conflicts of interest)
- What are the upfront costs, and will advice be focused on one element of your affairs or holistic?
- Will you cap the initial fees to ensure I pay no more than a pre-agreed maximum?
- Can the cost of advice be paid from a product, or will you expect me to settle the fees personally?
- What are the on-going costs, and what services will the firm guarantee to supply?
- Are you able to supply, in writing, details of the initial and ongoing services that you are supplying?
- How are these services delivered (phone, face-to-face, Skype, in-writing, via email etc.)
You and your firm’s status
- Do you give independent financial advice? (note: it is prohibited to use this term where advice is not independent – restricted – but many firms seek to confuse, or blur what should be a clear distinction. If they are ‘restricted’ is it the range of providers that are limited or do they only advise on specific product types)
- Are you a Partner (Equity or Salaried), Employee or Self-Employed adviser?
- In relation to the above, what safeguards are in place to make sure advisers are incentivised by good client outcomes as opposed to ‘billable hours’, product based adviser charges or commissions or other measures of revenue generation, that may not be in clients’ best interests?
- What is the size of your firm? How many people does it employ? For how long has it been established?
Experience
- What does your typical client look like?
- Can you give examples of where you’ve advised clients of similar wealth/situation/personality?
- Would any of those individuals be prepared to speak to me directly? (this allows you to ask other questions that may help frame the value on offer)
Research
- How do you conduct research?
- What is your investment philosophy, and why?
Others
- What makes you different?
- What is the benefit to me of your services/advice?
- How do you calculate your fees?
- Can you provide testimonials (and ask questions to understand if this person looks like you)
- Have you won any awards or other accreditations individually or as a firm?
Questions to ask yourself
- Can I imagine working with this person for my life, and would I trust this person to look after my widow/widower/dependants?
- Is this person good at explaining things in terms I can understand?
- Does this person understand my goals and concerns, and have I disclosed everything about my financial situation?
- Am I happy with the fees, and is this person open to negotiation?
