YOUR very first question should be, “Is this person registered as a financial adviser with the Financial Services Board?”
Every financial adviser must be registered. You can check on their registration here:
Other questions:* Who is their employer?
If they don’t run their own show, opt for people
employed by reputable companies. If they do run their own show, how long have
they been in business?
You’d be perfectly within your rights to ask for references from existing clients.* Which companies do they represent?
Financial advisers may have contracts with a range
of companies. Get a list to get a sense of how reputable the companies are and
how many options they can offer you.
Some advisers are ‘tied agents’, which means they work for just one company.
Others are independent agents who can
choose how many companies they wish to contract with.
You may want someone who is expert in the products of a particular company, or you may prefer to seek independent advice.* Does the financial adviser have appropriate qualifications and experience?
He or she might, for example, be a Certified Financial Planner or have some other qualification in financial planning. You would also naturally prefer someone who is both qualified and experienced, so find out how long they’ve been working in this field.* What is his or her area of specialisation?
Financial advice is far too broad a field for any one person to become an expert in every aspect. Be sure your chosen adviser specialises in a field that is appropriate for your needs.* Does he or she have Professional Indemnity insurance?
This provides you with some protection should you experience losses due to negligence or bad judgment on the part of the adviser – especially important if the adviser works for a small company or is a one-man band.* How will they be remunerated?
The options are commission, professional fees or a combination of the two. Make sure you know in advance what will be paid and who will be paying it – is it you or the company whose product the adviser is selling?* What minimum amounts are they prepared to work with?
Some advisers only work with people who have large sums of money to invest upfront; if you have a smaller amount, you won’t want to waste your time.
Watch out for advisers who don’t
have a code of ethics, people who do not provide you with a record of the advice
they’ve given you, and finally, steer clear of advisers who promise you returns
that are out of line with what’s on offer in the rest of the market.
If it sounds too god to be true, it probably is!