How to find the right financial advisor

Picking a financial advisor is not an easy task. With the increasing complexity of financial products and recent volatility in the global markets, professional financial advice is arguably more important now than ever. Deciding on the right advisor for you is not a step that should be taken lightly.

Of course, you’ll want to know more about their experience, the specific areas they specialize in, how they can help you plan to attain your financial goals, and importantly, how much will their advice will cost you.

With those questions in mind, how do you go about choosing the right financial advisor for you, your family and your business? I have highlighted some key factors to consider prior to engaging with a particular advisor.

Is your financial advisor actually independent?

True independence or impartiality is possibly the single most important trait for a financial advisor, it means the advisor must have no conflict of Interest. Many advisors are in fact “tied agents”, or have a preference for only one or two companies. For example, most of the main banking institutions in Ireland are tied agents, this means they are restricted to giving advice on only one product provider, this automatically limits the opportunities available to you. It ultimately means you may not be getting the best value or the most suitable product available on the market. The importance of engaging an independent financial advisor cannot be overstated.

Qualifications and Experience

Make sure you ask your prospective financial advisor about their past employment experiences and how long they’ve been advising clients like you. The basic minimum qualification for providing financial advice in Ireland is the QFA (Qualified Financial Advisor) designation, there are currently over 18,000 QFA’s in Ireland.

However, if you want advice over and above the minimum standard, you will need to select an advisor with additional qualifications. For example, a small but growing number of advisors nationwide have attained the Certified Financial Planner™ (CFP) status, these individuals have upskilled their own technical and professional skills far beyond the QFA level. When dealing with a CFP, you can be confident you will be dealing with someone trained to the highest International Industry standards.

Regular Communication & Reviews

You should work with a Financial Advisor who offers the facility for an annual review or at the very least keeps you informed on a regular basis. Knowing that your savings and investments will be reviewed on an annual basis provides you with greater confidence in your advisor, as they will have to stand over the original recommendations made at the outset, review the advice regularly and modify the details if necessary.

In addition, as the investment world and global economy changes on a regular basis, so do your circumstances and financial objectives. Regular, consistent reviews will ensure that you are invested in the right assets at the right time in your lifecycle.

Tax, Law & Financial Understanding

I also suggest making sure your advisor has a solid understanding of tax, accounting and estate issues. Poor tax and estate planning advise and knowledge can make decades of sound, prudent planning and savings dwindle rapidly. An advisor you’re considering should either have some background in these issues or have solicitors, estate planners and accountants that they work with that can help you.

Finally, consider their fee Structure

There are many different ways by which an advisor can get paid for their work. Usually, there are “fee only” advisors, “commission only” advisors and “fee based”, the latter who are often compensated by a combination of both. Regardless of how your advisor is remunerated, I maintain that the most important factor is transparency. It is necessary for you to have the conversation with your advisor, understand how they get paid and what consequences this has for you.

So when choosing your trusted financial advisor, I strongly recommend that you take your time and try to tick as many of the above boxes as possible. If your potential financial advisor does not pass these screens, then you should probably go back to the drawing board and start the process again. There is no point in engaging with an advisor unless they are up to the standard. Proper due diligence on your part is key to a long-term, successful relationship with your advisor.

Gerard O’Brien LL.B LL.M CFP® QFA is a Certified Financial Planner and the Owner of Heritage Wealth, a Financial Planning practice based in Main Street, Midleton, Cork. For more information, contact Gerard at gerard@heritagewealth.ie www.heritagewealth.ie