The best questions to ask your financial adviser

Why financial advice you can trust is vital

Firstly, finding a financial adviser you can trust is a real challenge.

After all, you’re putting both your hard-earned wealth and future plans in their care. And if you’re seeking an international financial adviser, the task can become even more daunting.

Whoever you are and wherever you may be, you’ll face the same sorts of issues when it comes to planning for the future.

You may want to help your children get the best start into adulthood or the best return from your pension, or you may want to leave a good legacy for your loved ones.

Much of how you achieve this comes down to planning, but an equally big factor can be the difference in regulation and products that each country has to offer.

If you’re considering a move overseas, you may have plenty of questions that you think need to be asked.

But how will you know if the answers you are given are the ones you want? And can you depend on them to safeguard your future wealth?

International advice can be a particularly tricky area, but Montfort International has some handy insights into what to expect. 

Your guide to ‘great, good and bad’ answers

Geraint Davies, Montfort’s managing director, urges prospective clients to be bold in asking questions.

"There is always a need to ask the right kind of questions when dealing with your finances," says Davies.

"It’s important that financial advisers have the ability to answer these questions.

"Certainly, they shouldn’t be afraid to show qualifications, experience and how well the company they work for is doing.

The guide is not designed to answer questions in detail but grades some typical answers as ‘great,’ ‘good,’ or ‘bad’ and explains the reason for each verdict.

In this way, it can help someone new to advice develop a keen eye for a good adviser.

What are the best questions to ask your financial adviser?

Here are ten of the best questions to ask your financial adviser to ensure you find the right fit.

1. How do you get paid for providing advice?

Reason: You are receiving a service which is going to cost you money, so of course, you need to know how much. Also, remember that nobody works for nothing, so if an adviser’s service appears to be free, you need to know how they are earning their income.

Great answer: Here is a full breakdown of our fees, illustrated both in percentages and monetary terms.

Bad answer: You do not need to pay me anything, as I get paid from the investments I place for you.

Davies says: "Keep in mind: if they say they are paid from the investments you make, you have to be aware that ultimately it is still you paying for it.

"You need to dig deeper to understand how they are paid by the investments or products, and how much.

"If they are evasive or broad in their answers, it should ring alarm bells."

2. How risky are the investments you’re recommending?

Reason: You want to understand how much risk you are taking with your money. You need to ask yourself whether you are comfortable taking this risk.

Great answer: I will need to do some risk-related fact-finding with you and assess your appetite for risk, your capacity (i.e. ability) to take risk, and the length of time you can invest these funds. I can then discuss the types of investment that would suit your circumstances.

Bad answer: You have to expect fund values to rise and fall. You have to take risks to get returns.

3. What experience do you have advising people in my situation?

Reason: You want to make sure this is not the first time they are dealing with someone in your situation.

Great answer: Yes, I deal with this on a daily basis and have evidence I can show you.

Good answer: Yes, I have dealt with similar cases – here are some examples.

Bad answer: No, this is my first case. (Or: Yes, I have dealt with similar cases, but can’t give you examples!)

Bear in mind that an adviser can only really answer this question once they have learned a certain amount about you as an individual.

4. How am I protected if things go wrong?

Reason: You want to make sure you are protected if the investments were misleading (or a complete scam, meaning you have lost everything).

The best advice you can receive is from an adviser in a regulated jurisdiction where there are appropriate powers to provide compensation. Make sure you know the jurisdiction that would cover any complaint.

Great answer: I have professional indemnity insurance, governed by local laws and regulated in our jurisdiction.

Bad answer: There are no regulators or protection schemes in this country.

5. What are your specific qualifications?

Reason: You need to be sure the adviser is professionally qualified to give advice. Look for established qualifications from accredited bodies, which demonstrate they have reached a recognised level of expertise.

Great answer: I hold the Chartered Financial Planner status, which is one of the highest qualifications for financial advisers in the UK. I can show you my statement of professional standing.

Bad answer: I have years of experience in finance, that’s more important than exams.

6. Are you an independent or restricted adviser?

Reason: This is a key regulatory distinction. An independent adviser can recommend products from the whole of the market, whereas a restricted adviser is limited to a specific range of products or providers. You need to know if their advice is limited in scope from the outset.

Great answer: I am an independent financial adviser, which means I can research and recommend the most suitable products for you from the entire market without any restrictions.

Bad answer: It doesn’t really matter, all the good products are on our list anyway.

7. How will we communicate and how often?

Reason: This sets clear expectations for the ongoing service you will receive. You want to know that your adviser will be proactive in managing your finances and available when you need them, not just at the start.

Great answer: We will have a formal review meeting every 12 months. In addition, you’ll receive quarterly portfolio statements from me and I’ll contact you directly if any significant market events or changes in your portfolio require discussion.

Bad answer: Just get in touch whenever you feel the need.

8. Who is your typical client?

Reason: This helps you understand if the adviser’s expertise and service model are a good fit for your circumstances. An adviser who typically works with high-net-worth individuals may not be the best fit for someone just starting out, and vice-versa.

Great answer: My typical clients are professionals in their 40s and 50s who are focused on planning for their retirement and managing their existing investments. Does that sound like you?

Bad answer: We can help anyone with money to invest.

9. What is your investment philosophy?

Reason: This reveals the adviser's core beliefs about how to best manage money. You want to ensure their approach aligns with your own views, whether that’s a preference for active management (stock picking) or passive investing (tracking the market).

Great answer: My philosophy is built on long-term growth through diversification using low-cost passive funds. We believe this is the most reliable way to build wealth over time, rather than trying to time the market.

Bad answer: We find the best funds that are going to perform well.

10. What happens to my money if you retire or leave?

Reason: You are building a long-term relationship. It’s important to know what the succession plan is for your portfolio and your financial plan. A professional firm should have a clear continuity plan in place.

Great answer: Our firm has a clear succession plan. Should I retire, your portfolio would be managed by one of my fully qualified partners, and we would ensure a comprehensive handover well in advance so the transition is seamless.

Bad answer: That’s a long way off, let’s not worry about that right now.

Get expert financial advice

When selecting a financial adviser, particularly for international matters, clarity and trust are essential.

Ensuring you ask the right questions not only helps gauge their qualifications and experience but also highlights their commitment to transparency and your best interests.

Remember, the quality of the answers you receive can make a significant difference in the security of your financial future.

Armed with these insights, you’ll be better equipped to make informed decisions and secure a solid partnership with a financial adviser who aligns with your needs and expectations.

Let Unbiased match you with a financial adviser for expert financial advice and peace of mind, knowing you’re working with someone who meets your specific needs and has a proven track record in guiding clients like you.