I always say to trust your gut, whenever you’re meeting someone for the first time. If you have a natural antipathy towards someone, that you can’t really explain, but it’s there nonetheless, go with it and don’t engage with that person if they’re hoping to be your adviser. I do think there’s a lot to be said for the sense of whether we naturally like and trust someone.
Like and trust – those are the two absolute non-negotiables when selecting an adviser. If you think about it, you’re unlikely to talk to your accountant about your health; unlikely to talk to your priest about your taxes (unless you’re confessing about fiddling them!) and you’re unlikely to talk to your GP about your bank balances.
Your relationship with your adviser will encompass all these things, so you really should like and trust your financial adviser from the first meeting.
It’s too much to ask a layperson about whether they get a sense of whether the adviser is a good one – how can you know that on the strength of one meeting? You can’t really, but these warning signs should give you pause, if they come up:
Mentioning products too early – If your adviser is quick to jump to ‘solutions’ (man, I hate that word) rather than taking the time to talk about planning, and working with you to establish your goals and plans, be wary.
Unwillingness or inability to explain financial terms and concepts – One of the things I loathe most about my profession is the tendency in many quarters to lord our knowledge of the system over our clients, essentially telling them not to worry their little heads about it and leave it to the professionals.
If you want something explaining, demand an explanation. If the adviser obfuscates or is condescending, tell them where to go. If they can’t explain properly, be very sceptical. Note that male advisers, which make up the vast majority, are the worst culprits here.
Talk more about themselves than about you – You’re paying them, remember. It’s you who should be the focus of the meeting. Be wary of an adviser who talks too much about themselves or their achievements or experience.
No mention of planning – Planning is everything. It’s where ALL the value is. Anyone can arrange an investment, pensions or insurance policy these days thanks to the miracle of the internet. But financial planning done right is a phenomenally powerful process, and it need not lead to any ‘solution’ at all.
Investment ‘expertise’ – most advisers are not actively involved in the management of your money. Rather, they will build a portfolio of funds for you. The managers of those funds are the ones actually making day-to-day decisions about how your money is moved around.
Your chosen adviser maybe an investing genius, but any adviser that sells themselves on something they cannot guarantee, such as investment performance, is selling you a puff of wind. The value is in the planning.
Weighting payment towards implementation – This is a tricky one because the weight of regulation is skewed towards implementation. It’s the advice on and arranging of products that is regulated. Planning, if it stops short of recommending specific courses of action, isn’t regulated at all.
So it’s understandable that many advisers will weight their charging towards implementation. The planning is low-key and low cost, but you’ll really pay if they arrange an investment or pension for you.
But that doesn’t make it optimal, in my view. The brain work, the skill is in financial planning. Implementation can be done by anyone. And the fees should be weighted that way.
Keep these things in mind as you have your initial meeting with your adviser. Personally, I’d be refreshed if I had a prospective client judge me by these standards and ask me these questions. Any adviser that gets cagey or defensive, be very wary of.
