Are you getting value for money from your financial adviser?

20th November 2013


It is almost a year since the City watchdog overhauled the financial advice industry in the UK whereby consumers must now pay for consultations with professional intermediaries – but how do they know they are getting a better deal?

On New Year’s Eve 2012, the Financial Conduct Authority tore up the rulebook of the UK’s investment advice industry when it introduced new legislation, dubbed the Retail Distribution Review (RDR).

Its goal was to make the cost of investing clearer by getting rid of the practice of product providers paying financial advisers commission for recommending their products.

Now investors have to pay upfront for advice, either via a percentage fee or an hourly rate.

Jacqueline Lockie, head of training, at trade body the Association of Investment Companies (AIC) outlines her best tips for on how investors can ensure that they are getting the best value for money from their adviser. 

Top questions to ask your adviser

1. Look at the fee structure – how much do you pay your adviser, and is it per hour, a flat fee per job, or a percentage of your assets that they manage?

2. If paying your adviser as a percentage of your assets, does that include all assets e.g. cash and other assets they don’t actively manage?  How do you actually pay it?

READ MORE: The fund charging shake up – what you need to know

3. Ask what savings have been made for you from your adviser’s financial planning – e.g. income tax or Capital Gains Tax.

4. Compare the performance of your funds over the last twelve months with sector averages, and ask your adviser for some perspective on this.

5. Contact with your adviser:  How often, and in what form, should you make contact with your adviser? Can you just phone up out of the blue – what’s included in your fee?

6. How does the adviser show your progress towards your objectives? Do they compare last year’s plan with this year’s plan?  How do they explain it all to you?

7. In meetings who does most of the talking?  You or the adviser?  A long term relationship is a balance but it should be the client saying how they feel and what they aspire to achieve and the adviser explaining how they are going to get you there.

8. What types of products do you currently recommend and why?

Private investors considering an adviser, or possibly changing their current adviser, can find more tips at the website of the IFP, using the booklet, ‘Questions to ask when choosing a financial planner’. is also a good port of call for investors looking for good quality financial advice in their area.

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