6 key questions to ask your financial adviser

Does your financial adviser tick all the right boxes?

Financial advisory firms come in many shapes and sizes and by many names. On the surface they may all seem to generally offer the same services and advisory protocols. But if you delve a bit deeper, you are likely to find this is not entirely the case.

So, entrusting your wealth and future financial well-being to a financial advisory firm, how do you know if you are getting the best advice and service possible that is best suited to meeting your specific requirements and best protects and grows your investment?

Carrick Wealth’s business model is premised on putting its clients and their needs at the centre of the client-adviser relationship. We always aim to improve the client’s experience with the highest standards of professionalism, firmly anchored within the applicable regulatory and compliance environment. This ensures that clients and their investments will be best served.

At Carrick we believe the best way to achieve this peace of mind, is to ask your existing or prospective adviser a number of key questions. Below follows a checklist of the essential questions to ask your adviser.

The 6 Key questions to ask a financial adviser

1. What is your business philosophy? What sets your firm apart to best achieve my goals?

Ask the adviser to explain to you his or her personal business philosophy, their firm’s business model and philosophy, as well as their investment philosophy, and see if it matches your own philosophy and expectations. The adviser’s core responsibility is to make investments consistent with your risk tolerance and goals in order to grow, protect and preserve your wealth. Ask the adviser to lay out the strategy they would follow to achieve your goals. To gain better insight into the advisory firm to which you will be entrusting your wealth, ask them for details on issues such as regulatory approval, jurisdictions, company structure and staff component, size of their client base, value of assets under their management, oversight committees that govern key areas of their business, and ask them to explain their adviser-client model to you.

2. What technology does your firm use and how is it balanced with personal contact?

In a fast-paced and ever-changing world in the midst of an astounding technological revolution, it is important to establish whether the financial advisory firm uses all the best and latest technology enabling it to provide you with the best service, information and assistance. Beyond advisers merely establishing their clients’ goals and risk tolerance, important as those are, they also need to create a model of your entire financial life using financial planning tools. You need to have real-time access to a constantly updated overview of your portfolio. There’s a fine balance between technology and ‘the human touch’, with some investors preferring a fully tech-driven solution, while others prefer a mixture of technology and the time-tested personal touch. Ask the adviser how they will meet your preferences in this regard.

3. What experience and qualifications do you personally have as a financial adviser?

You wouldn’t allow someone to drive your car without first establishing whether that person has a valid driver’s licence. So, when appointing someone to ‘drive’ your wealth and investment portfolio, it is obviously far more important to know whether that person is suitably licenced, qualified and experienced in addition to the licences held by his/her firm. At Carrick we strongly promote a culture of continuous skills improvement and advisers achieving higher qualifications.

4. Are you licenced and regulated, for what and in which jurisdictions?

It is very important to know that your existing or prospective adviser/advisory firm is correctly licenced, in which jurisdictions and for what – especially the jurisdiction in which you live and where you ultimately decide to invest is important. The regulatory environment is dynamic and changes over time. In South Africa the Twin Peaks model of financial sector regulation was implemented on April 1 this year, establishing two new dedicated regulatory authorities – the Prudential Authority and the Financial Sector Conduct Authority (FSCA), previously known as the Financial Services Board (FSB). Your adviser should at all times keep you fully updated of any changes and their effects.

5. Do you comply with fiduciary standards?

This is probably the most important question to ask as it encompasses the entire client-adviser relationship. Simply put, this involves the highest level of trust in the client-adviser relationship and requires that the client’s interest is always put first. To meet fiduciary standards the adviser should disclose what services they will or can provide, as well as any limitations pertaining thereto. They should only offer advice in the areas in which they are competent or licenced for. Any conflicts or potential conflicts of interest that could influence your decision to use their services, must be disclosed.

6. Explain how you will earn your money within the scope of your financial plan for me?

This question will establish exactly how and how much you will be paying for the advisory services, broken down within the scope of the financial plan the adviser proposes for you. Ask for a full breakdown of all the fees you will be paying and how the adviser and advisory firm will earn their income. Their plan for you should include an illustration of fees versus returns and growth, as well as a risk profile showing the risk required to achieve the intended outcome of the plan. This will allow you to weigh the cost versus the value of the proposed plan.

The Carrick Way

Carrick’s business model addresses the above questions. As mentioned, Carrick subscribes to a client-driven model, based on a number of key stages completed between client and adviser. Our qualified Wealth Specialists will also present prospective clients with a Representative Disclosure document that outlines their training, qualifications and experience; the products and services the adviser will be able to provide advice on; and subsequent regulatory disclosures. Carrick’s Client Service Charter outlines our pledge to provide our clients with, at a minimum, a quarterly portfolio valuation and a commitment to service excellence. At every stage Carrick sends clients written communication informing them of the status of the investment process. We believe this is the best way to drive a mutually satisfactory and beneficial client-adviser relationship that will sustain maximum results and peace of mind for our clients.

If your financial adviser does not tick all of the above boxes and you are looking for one that does, contact Carrick at wealthmanagement@carrick-wealth.com.