I read this article about American advisers recently and it got me thinking about what the best questions are to ask your adviser.
Most advice firms state that their biggest source of new clients is from client recommendations. This is great – it is always better to get a recommendation from someone you know and trust who is already using the product and service.
However when it comes to something as important as your future wealth, perhaps it is appropriate to find out a bit more about the person you are entrusting it to.
The issue is, that for most people seeking an adviser, it will be their first attempt (changing an adviser is rare according to the stats) and at most it might be a second or third. The adviser on the other hand probably talks to new potential clients every week. There is a mismatch in experience of handling these situations.
As a potential client it is good, therefore, to be able to get a bit more on the front foot when making your initial approach. Forewarned is forearmed. If you can go into an initial conversation with a potential new adviser with some uncomfortable questions for them, you can rebalance the scales.
The above article is a good starting point but a bit too investment focussed and US centric. I like the last four questions though and so have incorporated them below:
- Do you offer a flat fee service?
- If not why not (but if they say no this might be a good reason not to proceed)?
- Do you increase fees each year by inflation?
- A flat retainer fee service will need to have something baked in to make sure the company isn’t losing money in ten years time.
- What exactly is included and excluded in the service?
- Make sure that what they offer covers what you need.
- Why are your fees not higher?
- This is an interesting one as it may uncover a plan to increase fees in the future.
- Do you recommend in-house portfolios or can you recommend any solution?
- There is not necessarily a wrong answer to this question but if in-house only, there is a higher test of performance needed.
- What happens if you sell the firm, or retire, or die?
- This is a good way to uncover the firm’s future plans. A change of ownership often leads to a change in service and fee.
- What is the aspect of your service you are least happiest with currently?
- This is a great one to end with as they should be able to give something. No firm is perfect.
This isn’t about being a difficult customer, it is about gaining a deeper understanding of who the firm are and what they offer. It is tempting to send a list of questions in advance of a meeting to avoid any in-meeting uncomfortableness but try to avoid this temptation. With enough advance warning, the answers will be too polished to be of any use.
Good luck with your adviser hunting and do contact us if you want more information on flat fees. Contact one of our advisers via our office in Hook, Hampshire.