Five Questions You Need to Ask Your Financial Adviser

So you finally decided that you want to seek a financial Adviser to keep your finances on track and reach your financial goals. If you don’t know where to begin, we have laid down five critical questions that you need to ask your financial Adviser to clear out any confusion you might have. Asking these questions will not only enlighten you, but it will increase the comfort and trust level you have for your financial Adviser.

  1. Is he/she a fiduciary?

Since 1 July 2013, all financial Advisers must act in the best interests of a client. Everyone is subject to a statutory fiduciary duty, which means a financial Adviser needs to place the best interest of the client on top of his own agenda or any financial product out there. So if you want to find out whether your financial Adviser has your best interests in mind, ask him the question, “Are you a fiduciary?” If he’s not even aware of the fiduciary duty, then you know that something is not right.

  1. How does he make money?

If you want peace of mind that you are in the right hands, ask your financial Adviser how does he make money. If he hesitates and can’t explain this straightforwardly, then you have all the reasons to doubt his credibility. The best basic rule in finance is to not buy anything that you don’t fully understand. If you are paying for his advice, make sure that the cost, commission, or management fees are reasonable, transparent, and explained to you well.

  1. What are the services included?

Will he manage your assets or investments? Will he assist you in estate planning? Will he help you in planning your children’s education? The services he provides add value to the fee that you pay so make sure that you communicate your desires with him. Your financial Adviser, in return, should be honest on what services he can or can’t provide.

  1. How does he help you with taxes?

A good financial Adviser will not only recommend investments, but will also optimise your portfolio for tax savings. You can ask your financial Adviser how he will help you allocate your investments in your taxable account and non-taxable account, e.g. retirement portfolio.

  1. What technology does he use for the benefit of his clients?

The old ways of building portfolios based on written questionnaires are a bit outdated. Knowing clients’ goals and risk tolerance through a tech-driven tool is a big advantage. Find out if your financial Adviser is using a technology that is able to track your account balances, holdings, and transactions. A financial Adviser should have an overall view of your financial life, including your investments and debts.

2 thoughts on “Five Questions You Need to Ask Your Financial Adviser

  1. Tyler Meredith says:

    I like that you recommend asking about whether they’d help with taxes. It makes sense that along with other aspects of financial management, taxes are very confusing and complicated for the average individual. Having help from a professional financial advisor that has experience in all aspects of finances could be good to prevent unnecessary complications.

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