6 questions to ask when looking for a financial adviser

If you’ve never used a financial adviser before, the prospect of opening up about your money can seem a bit scary, and you’re likely to have a lot of questions. How does it all work? Can I trust them?  

A financial adviser can be sought for tailored help in a range of areas, such as investments, retirement income planning, tax or mortgages. They can also just help you meet your long-term financial goals and make sure your finances are on track. 

The right advice can make a lot of difference to your financial situation as you approach, or enjoy, retirement. But when seeking help with your money, it’s important to understand the difference between financial ‘advice’ and financial ‘guidance’.  

The government-backed MoneyHelper and Pension Wise offer free and impartial financial guidance.  

But guidance only offers an overview of your options, leaving you to make your own decisions – for advice tailored to your circumstances and specific recommendations, you’ll need to speak to a financial adviser. 

Karen Barrett, Founder of Unbiased.co.uk, a platform which helps people find financial advisers, says: “Financial advice can be invaluable when it comes to life-changing decisions, such as retirement, by ensuring you have enough money to enjoy your golden years.” 

This article is designed to help you gather information for the financial advisers you might potentially work with – it's not a complete guide to selecting a person or firm to give you advice. 

If you do choose to trust someone with your money, it’s important you feel comfortable with the service they provide and understand the fees they charge – if anything doesn’t feel right, consider whether it’s the correct service for what you need. 

You could potentially be trusting someone with large sums of money, so ensuring they’re qualified, regulated and possessing the right expertise you’re looking for is important. 

This list of questions is not exhaustive but should give you a starting point for further research as you choose a financial adviser – remember to take your time and not rush into any decisions.   

1. How do you charge for advice?  

Financial advisers are subject to strict rules set out by the Financial Conduct Authority (FCA).  

These mean that advisers must explain how much their advice will cost and agree with you how you’ll pay for it.  

Sarah Coles, Personal Finance Expert at Hargreaves Lansdown, says: “A financial adviser might charge an hourly rate or a fixed fee, or a percentage of your investment portfolio.  

“They will always make it clear up front how their charges work, so you can make an informed choice. This should be given to you in writing, so you can take it away and consider it carefully.  

“You should check whether they are charging for one-off advice, or whether there are ongoing costs for regular reviews.”  

Historically, advisers were able to earn a commission when they recommended certain products including pensions, investments and annuities. However, this practice was banned in 2013 to ensure advisers’ recommendations weren’t swayed by these payments. 

2. What products and services can you recommend?  

A financial adviser will be either ‘independent’ or ‘restricted’ – it’s important to understand how these terms are defined. 

An adviser or firm classified as ‘independent’ will be able to offer advice and recommend products from across the whole of the market. Citizens Advice suggests it’s “usually best to get independent financial advice so that you can look at the widest range of advice and products available.” 

You might see these referred to as an independent financial adviser, or IFA. 

If, on the other hand, they are ‘restricted’, advisers may only be able to recommend products from certain providers. This could be the products of one single company or a panel of providers. 

Alternatively, a restricted adviser might only be able to offer advice on one specific area – such as pensions – but be able to recommend any product within that area. 

Barrett explains: “When you have your initial meeting with an adviser, they must tell you whether they’re independent or restricted – if it’s the latter, they must clarify how they are restricted.”  

“If you want to choose from the broadest range of financial products, an independent adviser is worth considering.” 

3. What are your qualifications?  

All financial advisers must be qualified, meaning a level 4 qualification in financial advice, recognised by the FCA. Many also have additional certifications in certain areas. 

They must also have a Statement of Professional Standing (SPS), which binds them to a code of ethics and regular training throughout the year – it should be renewed annually, so don’t be afraid to ask to see it. 

Some over 50s might benefit from specialist advice aimed at their age group. For example, advisers who are members of the Society of Later Life Advisers specialise in advice on financial issues in later life and can help make plans for retirement years. 

4. What would happen if something went wrong?  

Firstly, it’s important to ensure you’re using a regulated adviser, which will involve a quick search. 

“In the UK, authorised firms must be regulated by the Financial Conduct Authority and you can check up their regulatory status by searching the Financial Services Register,” says Jason Hollands, Managing Director at financial services firm Evelyn Partners.  

“Never take advice from an unregulated adviser.” 

Alex Whitson, managing director at VouchedFor, another service that helps people find financial advisers, says: “In the unlikely event that your relationship with your financial adviser doesn't work out, speaking with [them] in the first instance can be the quickest way to resolve your concerns.   

“If this doesn't help, or if the issue is particularly severe, then you can take the matter to the Financial Ombudsman Service – a free service that settles complaints between consumers and businesses providing financial services.”  

5. Will I only deal with you or other members of your team?  

Most financial advisers work in a team with support from paraplanners, and an administration team. Firm sizes can vary from less than 10 staff to large national advisory firms with hundreds of advisers. 

Nick Flynn, Retirement Income Director at financial services provider Canada Life, says: “All firms will have plans to cover for individual advisers that are off long-term sick or die.  

“It’s worth asking about these when you first meet, but in most cases, [investments are] via the IFA rather than in the IFA.  

“So, [any funds invested] will remain with the product and funds selected. For larger firms these may be linked to the firm, but client funds are held separately.” 

6. How should I prepare for my first meeting with you?  

Most advisers will tell you in advance how to prepare for an initial meeting. You’ll normally need to have rough figures regarding your savings, investments, insurance policies, pensions, and any debts, but if in doubt, do ask. 

As this needs to be a trusted relationship, it’s important you feel they’re capable of understanding your specific financial needs and goals – so this is a good chance to see what kind of questions they’re asking to understand your situation. 

“You need to be able to connect with your chosen adviser,” says Coles, “Don’t be afraid to meet a couple of potential advisers and check you feel comfortable with them.  

“You should also consider someone who is prepared to meet in the way that works best for you – whether that’s face-to-face or remotely.” 

Ask around your peer group for financial adviser recommendations. It’s possible some of your friends have taken professional advice about retirement and later life planning.  

Hollands adds: “It is also important to ask whether there are any minimum wealth levels to be a client and what types of clients they typically service.  

"The right adviser for you may not be [the same one used by] a friend or family member."

Clarity is key 

Use your initial meetings to ask as many questions as you like to get a full idea of the kind of adviser you’re dealing with, and make sure everything is explained to you clearly and that you understand what’s being said. 

If in doubt, don’t be afraid to ask and take notes. An adviser should take the time to make sure you’re clear on what’s being offered and are confident you understand everything. 

It’s important to take your time and put in the necessary effort to find someone that you feel you can trust - and are comfortable advising you on your financial decisions. 

It's critical you don't rush into anything, make a considered choice and only commit if you feel truly comfortable they can help you meet your personal financial goals.