financial advisor questions

[steve1]

Off to see a F/A next week, see if he can't get a decent return on my money for me, he comes highly recc. by a long term friend of ours, always done well with their money over the past 10 or so years, but seeing as I've never really used one before I'd like to know what sort of things I should be asking him, ( apart from the obvious questions ).
Thanx.

[Steffan]

How is he being paid?

Fee based advice should give you a better chance of scrupulous honesty.

Commission based advice has resulted in churning and other such nonsense.

Best of luck.

Remember one golden rule.

If an investment looks too good to be true it probably is too good to be true.

[F458]

Ask him what service he is going to provide for his renumeration? Is he going to take trail commission and provide you with valuations/reviews and ongoing advice so that you can phone him up whenever and ask him a question or is he taking a fee and will charge you again for each review/valuation etc etc..

Is he truly independent or a tied 'sales adviser'?

What are the product charges? If you are doing a SIPP or bond etc etc

What are the fund charges, what is the TER - total expense ratio - the money that the fund will take out of your fund every year no matter what the performance may be.

Are there any initial charges to go in to the fund? If so what are they? What are the costs to switch funds in an investment? Why is he recommending these funds above the other 1000's that are avaliable?

Make sure if you are taking a product off him that you know what the product charges plus the fund charges will be.

What is your attitude towards risk? Many of the 'risk profilers' looked at by the FSA have been deemed useless. When you fill one of these in and if it comes back as adventurous when in fact you know that you are cautious then tell him its wrong!!

Get a comparison between the costs for fee based advice and commission based advice, every one bangs on about how bad commission is but if an adviser is taking 0.5% trail commission and providing you with a high level of service then sometimes the adviser realises thats its also in his interest to keep you happy and your funds under management. If he has taken a one off £500 fee and can not make any more money out of you then will he be so concerned?

If you write down a list of questions to take in with you then the adviser should have no problem telling you how he operates, it will cut out all the smoke and mirrors and let you know where you stand.

Just don't ever see a bank for financial advice!!

[RESSE]

Request a copy of his/firm's Terms of Business/Client Agreement this will detail the remuneration basis and you can choose whether to:

1. Pay by combination of fee and commission.
2. Pay be fee only.

[zac510]

Ask him where his client's boats are.

[Beardy10]

Ask him for copies of his past investment recommendations/list of recommended fund from say six months, three years and five years ago. Both in terms of which asset classes they recommend and the funds in those asset classes.

Then have a look at how those recommendations have performed.

An IFA can be brilliant at financial planning (how to invest) but be god awful at advsing where to invest.

Don't always be driven by who charges the lowest fees as like everything in life quality costs.