10 critical questions to ask your financial adviser

It is always a good idea to have a financial adviser, but you should know what to ask to ensure you get what you want from your finances.

Stian de Witt, head of financial planning at financial advisory firm NMG Benefits, says that having honest conversations with your financial adviser is not just a right – it is your responsibility.

“In much the same way that you explain your health concerns to your doctor and then question the treatment plan, you should be comfortable sharing your overall financial health with your adviser and questioning everything you do not understand.”

Questions for your financial adviser

De Witt says you should ask your financial adviser these 10 top questions:

What does long-term financial success look like? Before conducting a thorough financial needs analysis (FNA) your adviser should be able to articulate your definition of financial success and how this serves your values, dreams and goals.  Only then you should start talking about products.

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How will you incorporate my budget and circumstances into my financial plan?

This is where the dreaded four-letter word needs to be spoken out loud: debt. A holistic financial plan and budget should prioritise settling interest-bearing debt before looking at investment and savings products.

Can you assist with creating a will?

Your adviser should be able to draft a will that is legally binding and executable and that provides peace of mind around how your estate will benefit your beneficiaries. Your will should be integrated into your financial plan and insurance policy beneficiaries. It is not a stand-alone document for your financial plan.

What fees are payable on my investments?

Are they charged upfront, or on an ongoing basis? The fee structure should be transparent and the long-term impact of the fees on your investments must be clarified.

What premium patterns are applicable?

“Premium pattern” refers to how your initial life insurance premium will change over time. A level pattern [in which your premiums do not have age-related changes] may be expensive to start with but should become easier to manage as your income increases down the line.

Conversely, a compulsory pattern might be discounted to start with but become more costly over the longer term. Beware of being “penny wise, pound foolish”.

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Are you independent or tied to a specific insurance provider and what is your level of expertise? Advisers must disclose whether they are able to offer independent, objective advice, or whether they may only sell a specific company’s products.

You must ideally try to work with an adviser who is a certified financial planner (CFP) and who earns the industry-required 35 continuous professional development (CPD) points every year.

If your adviser is working under supervision, you are entitled to ask about the supervisor’s objectivity, experience and qualifications.

How will you be remunerated if there is no commission from products?

The remuneration model, including any consulting fees for advice, must be explained clearly and upfront.

Will you work with my accountant and bankers to ensure that my financial plan is aligned?

If you own a business, your adviser should be willing to collaborate with the other professionals involved in the company’s financial affairs to ensure that you, as the ultimate beneficial owner (UBO) benefit from a cohesive and comprehensive financial plan.

How often will you review my portfolio and what does your reporting look like?

Your adviser should commit to regular portfolio reviews and provide detailed, understandable reports on your investments and overall financial status.

Do you advise that I withdraw from my two-pot?

 If your adviser recommends that you do not access the available “pot” to service short-term needs, you should accept the advice and discuss alternatives. The goal of your financial advisor is to guide you on making the best-informed decisions for your future.

“Trust and rapport between you and your advisor are critical in ensuring that you achieve your financial goals and long-term investments plans,” De Witt says.