How to Make Sure Your Financial Adviser is Doing What You Need

Swap your phone line to another service provider and you know exactly what you're going to get before you sign any contracts. The same when you're booking a flight. Sure, there are some variables like whether it's a flexible ticket, or business class but there's no question about whether the airline will get you from A to B.

But what about Independent Financial Advisers? What should they be doing for you? That's a different question.

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robo financial advice

Some financial advisers provide poor quality "robo-advice"

Despite being subjected to the regulatory might of the Financial Conduct Authority, there are huge variations in the level of service that are provided by IFAs up and down the country.

So here's a checklist of 10 things you need your adviser to do for you.

Know your financial circumstances in detail

Planning for the future is impossible without gaining a clear understanding of where you're at right now with your finances.

Ensure that your adviser provides a free initial review where you and your partner (if appropriate) get to meet for an hour with the adviser to explain your background and your previous financial experiences.

Although not providing any immediate value, there can be no short cuts to this initial "fact find" as it provides an essential backdrop against which all other plans and strategies are placed.

Get to grips with your goals, aspirations and values

Your adviser should invest time in getting to know you (and your partner if appropriate). She should understand your aspirations, goals and plans for your future life.

Financial planning should start with the end in mind. #finance #pensions

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As importantly, she should help you articulate your attitude to risk and values so that any recommendations they provide closely match your needs.

Whilst many advisers prefer to focus on the solution (the bit that earns them money), the best will know that any plans produced without first understanding your destination will probably fail in the long run.

Make sure that your prioritised needs are met

If you already work with a financial adviser, or are in the process of engaging one, it’s probably because you’ve acknowledged that you need to acquire a certain expertise in financial planning. These are the things which you know you don’t know.

But there may be other areas where you don’t appreciate that you have an unknown financial need. It’s your adviser’s job to (candidly) raise your awareness of these issues and to help facilitate a solution.

To ensure that all bases are covered your adviser should normally work through the following hierarchy of needs.

The PRISM Hierarchy of Financial Needs

Protection – ensuring that your near and long term finances are protected from an unexpected catastrophe. Includes life insurance, Income Protection and using a life policy to protect against future tax liabilities.

Retirement – providing an income in retirement. Includes all sources of income including private and occupational pensions, the State Pension, property and business assets.

Investment - using accumulated wealth for a specific purpose sometime in the future.

Savings – ensuring money is saved for short term, non-specific purposes.

Medical and mortgages - covering private medical insurance and house purchases.

Take an Independent View

Not all financial advisers are truly independent, capable of taking a "whole of market" approach to sourcing any product-based solutions to your needs.

Many are tied to a limited range of suppliers and therefore aren't necessarily providing the most appropriate solution to your unique set of needs.

Be open and transparent

There's a misconception that the days of commission payments to advisers from big financial companies are gone. That's not the case.

Commissions on certain product groups (like investments) are banned, but your adviser may still get paid a hefty commission for recommending other types of product, like life insurance, mortgages and investment platforms.

You should expect your adviser to be open and transparent with you, being clear about how they make money. You're then in a position to make your own assessment as to whether your advice may have been guided the prospect of secondary payments from a product provider.

Use Jargon-Free Language

Financial and tax planning are both complex matters. But that doesn't mean that you should be forced to muddle on through, not quite sure why certain recommendations are being made.

It's your adviser's job to make even the most complex of concepts simple for you. You should expect them to use jargon-free language that you can understand.

Nigel and team are a great personal asset. They de-mystify the complex world of personal financial management, and do what they say , when they say they are going to do it. Its personal with Nigel and that is a huge strength of Reeves IFA.

Managing Director 
Durham

Get involved in short and long term issues

Your adviser should be able to add value immediately after their engagement - making a real, positive impact on your finances in the short and long term.

Whilst their fee income is going to be driven by the bigger, longer-term actions you'll likely take, you should expect them to also invest the time to help your short term finances too. That’s even though they probably won't make much money from their work in this area.

Provide regular updates

Life doesn’t stand still from one week to the next, let alone from one year to another. It’s crazy to think then that you should agree a plan with your adviser when you first meet, and then for that to get cast in stone for the rest of time.

If you're paying an ongoing management fee, your adviser should proactively review your plans with you on a regular basis to check whether your circumstances have changed, to analyse how those changes affect your plan and agree any necessary adjustments with you. Your life is busy, so your adviser needs to take responsibility for making sure this happens.

Life doesn’t stand still. So your financial plans shouldn't be cast in stone. #finance #pensions

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Be out of sight, but NOT out of mind

The best advisers have systems to ensure that they are constantly scanning the market and economy data looking for insights that might affect your plan.

Irrespective of when your next scheduled review is due, they should be proactive in contacting you if external factors mean an adjustment to your plan is required.

Always be there for you

It’s good to have structure to a relationship. Planning reviews ahead of time helps you manage your time more effectively.

But questions or concerns will arise for you in between meetings and it’s important that you have an opportunity to address these on an adhoc basis without getting a hefty bill through the post for time spent on the telephone, or actioning a minor change to your portfolio.

You need your adviser to be available for you.

So how does your adviser shape up? Give me y​our feedback below. I'd also love to hear if there's anything else that you think a financial adviser should do.

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About the Author

By Nigel Reeves: My mission is to provide the quality, honest & jargon-free pension advice that people need to secure the retirement they deserve. At home, I'm a family man and an active supporter of grassroots sports!

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