10 Must-Ask Questions for Your Financial Adviser

“Planning is bringing the future into the present so that you can do something about it now” ― Alan Lakein

5 min read

10 Must-Ask Questions for Your Financial Adviser

“Planning is bringing the future into the present so that you can do something about it now” ― Alan Lakein

5 min read

Your Financial Adviser plays a crucial role in shaping your financial future. Whether you’ve been with them for years or recently engaged their services, it’s essential to ensure that you’re on the right path.

Asking the right questions can help you evaluate your current Financial Adviser’s effectiveness, or even one with whom you are about to enter a relationship, and make informed decisions about your financial well-being. So, here are the top 10 questions to ask your Financial Adviser to ensure you are receiving trustworthy and suitable advice, and, if you read to the end, you’ll get a bonus, too!

1. Are they completely independent, or are they tied Advisers?

Tied Advisers work for or are associated with specific financial institutions, such as banks or insurance companies. They are “tied” to the products and services offered by their employer or partner. This often leads to receiving ‘incentives’, such as a bonus or commissions, based on the sales of specific products or services. You may find they have a limited range of investment options available to you, which in turn can harm your returns.

Independent Advisers on the other hand are not tied to any specific financial institution. They have the freedom to recommend a wide range of products and services from various providers, including those outside mainstream institutions. The income they receive is often not based on the sales of specific products and this transparency reduces conflicts of interest. The loyalty of an independent Adviser is to their clients first and this allows clients to benefit from advice that is the most effective for their own individual circumstances.

For example, at Patterson Mills we are wholly independent and so you will only receive recommendations that are in your best interests, with advice tailored to you.

2. How are they paid? Are they receiving commissions for any work undertaken or investments recommended?

If so, do you know how much they receive / have been receiving? Do you know what work has been carried out for this commission? Are you getting bang for your buck? It is important to know whether your Adviser is working in your best interests, or their own financial interests.

Your Adviser should always be transparent about how they are paid and all fees and costs that you might incur.

Inquire about both advisory fees and the expenses associated with the investments in your portfolio. Understanding these costs is essential for evaluating your overall returns.

3. Is everything charged in a transparent and clear way?

Transparency in fees and charges is paramount when working with a Financial Adviser. It’s essential to have a clear understanding of how your Adviser is compensated and any associated costs. A reputable Adviser should provide a detailed breakdown of all fees, including advisory fees, transaction costs, and any third-party fees related to investment solutions.

They should also explain the fee structure, whether it’s fee-only, fee-based, or commission-based, ensuring that you’re fully aware of how they earn their income. Transparency fosters trust in the advisory relationship, allowing you to make informed decisions about your financial investments and ensuring that there are no surprises when it comes to costs. If any aspect of the fee structure seems unclear, don’t hesitate to seek clarification from your Adviser to ensure transparency in your financial dealings.

4. What are your qualifications?

When evaluating a Financial Adviser, it’s crucial to inquire about their qualifications and credentials. These qualifications speak to their expertise and ability to provide sound financial advice. Look for Advisers who hold recognized certifications such as Chartered Financial Planner (CFP),  or are least a minimum of level-4 qualified.

Additionally, inquire about their educational background and whether they have specific training or experience in areas relevant to your financial goals, such as retirement planning, estate planning, or investment management. A well-qualified Adviser should be transparent about their qualifications and readily provide evidence of their expertise to instill confidence in their ability to guide your finances effectively.

At Patterson Mills, all of our Advisers have a minimum of a Level-4 CII certification, with additional qualifications up-to Chartered level, the gold standard of financial planning qualifications.

5. What's your investment philosophy?

Understanding your Financial Adviser’s investment philosophy is crucial to ensuring that their approach aligns with your goals and risk tolerance. An Adviser’s investment philosophy outlines their fundamental beliefs and strategies when it comes to managing your assets. They may follow a conservative approach, prioritizing capital preservation, or adopt a more aggressive stance, seeking higher returns with increased risk. It’s important to discuss their views on asset allocation, diversification, and the role of different asset classes in your portfolio. By gaining insights into their investment philosophy, you can determine whether it harmonises with your financial objectives and preferences, ultimately setting the stage for a successful and mutually beneficial advisory relationship.

By clicking here, you can download our Patterson Mills Investment Management Approach to find out exactly what the Patterson Mills investment philosophy entails.

6. What's my risk tolerance, and is it reflected in my portfolio?

Your risk tolerance can change over time. Ask your Adviser to reassess your risk tolerance and ensure that your portfolio aligns with it. This step can help prevent uncomfortable surprises during market fluctuations.

Your risk tolerance should be reviewed at least annually.

7. How accessible are you for questions and updates?

Communication is key. Ensure that your Adviser is accessible when you have questions or need updates on your financial situation. Discuss preferred communication channels and response times so that your expectations can be met.

8. Can you explain my investment strategy?

Understanding your investment strategy is fundamental. Ask your Adviser to explain the investment approach they’ve taken with your portfolio. This should include details on asset allocation, risk tolerance, and the rationale behind their choices. It is essential that you are able to make informed decisions and are kept up-to-date with exactly what is going on with your money and where it is going.

9. What is your succession plan?

It is important to understand what happens to your investments and relationship with your Adviser in the event of their retirement or unexpected absence. Is there a team or other Adviser available that will be able to continue advising you advice following their retirement, or will you have to take the effort to find one yourself?

10. What is the process for withdrawing funds or making changes to my portfolio?

Clarify the steps and timelines involved in making withdrawals, changes, or adjustments to your investments. You do not want to be caught out by any withdrawal fees that you did not know about beforehand and therefore have not planned for.

Bonus Question! What Is the process for reviewing and updating my financial plan?

Understanding how often your financial plan is reviewed and what prompts updates based on changing circumstances. Whilst your portfolio should be monitored on an ongoing basis by your Adviser, you should meet with or have an online meeting with your Adviser at least once per year.

Trust, Security, Patterson Mills

At Patterson Mills, we take pride in delivering the highest level of service to our clients. We understand that trust and transparency are the cornerstones of a successful advisory relationship. When you partner with us, you can rest assured that all your questions, including those about qualifications, fees, and investment philosophy, will be answered truthfully and comprehensively.

We are committed to providing you with clear, honest, and tailored financial planning advice, ensuring that your financial goals are not just met, but exceeded.

Your financial well-being is our top priority, and we’re here to support you every step of the way. So, get in touch to book your initial, no-cost and no-obligation meeting. Or, send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.