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The best questions to ask your financial adviser

Updated 13 June 2023

4min read

Alex Norwood

…and the best answers to look for. When finding a financial adviser, especially outside the UK, it’s easy to get bewildered and accept what you’re told. But now the Unbiased-listed Montfort International have developed their own definitive guide to the questions you should be asking your financial adviser.

Finding a financial adviser you can trust is a real challenge. After all, you’re putting both your hard-earned wealth and your 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 want to help your children get the best start into adulthood; you want the best return from your pension; and you 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, which is why the team at Montfort International has launched a free guide. The guide is designed to help you navigate your way around choosing the best financial adviser for your unique circumstances – and also to help keep them on their toes!

The guide covers questions about an adviser’s qualifications and experience, questions to ask about commissions and costs, what to ask about the risk of investments, tax implications, customer service levels and who to talk to if things go wrong.

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. 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 booklet 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 the layperson who is new to advice to develop a keen eye for a good adviser.

Let’s take a look at some sample question and answers.

•             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.

Montfort say: ‘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/products, and how much. If they are evasive or broad in their answers, it should ring alarm bells.’

•             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 to take this risk or not.

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 risk to get return.

•             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.

•             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 by 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.

These are just a selection of the great questions and sample answers provided in Montfort’s Q&A booklet. Armed with this guide, any consumer can put themselves in a stronger, more confident position to assess a prospective financial adviser before they commit to any decisions.

Explaining why Montfort has produced its guide now, Davies said, ‘At the moment, the FCA is consulting with leading financial advisory firms who are advising on pension transfers about how financial advice considers the customer’s circumstances in full, and the various options now available to them. The FCA want to provide advisers with a framework which better enables them to give the right advice so that consumers make better informed decisions. Our new questions booklet goes a little way to help ensure consumers ask pertinent questions to help protect their investments.’

The booklet covers 19 specific queries and includes a final quick checklist. Download it now from the Montfort site.

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About the author
Alex Norwood
Alex Norwood is a financial adviser at N2 Asset Management. He has a degree in Business Administration and Management and is working towards Chartered status. A pension transfer specialist and associate director, he has been awarded a place in New Model Adviser's prestigious Top 35 Next Generation Advisers.