THIS is adapted from an article previously posted on this site’s predecessor. In line with our “some things never change” here it is again, adapted as some things might actually change. It is more topical.
Original by allanduff, on October 14th, 2010 Sourced from : FD Media & Investor Relations

The technicalities involved, both product knowledge and estate planning and now all things internet,  in most investment and life assurance products coupled with the complexity of tax and associated legislation makes it practically impossible for even the well-informed investor to manage their financial affairs themselves.

In short “the assistance of a professional financial advisor is essential if your investments are to deliver substantial long-term benefits to both you and your family”, said Linda Sherlock, Head of Advisory, Alexander Forbes Financial Services.

Since selecting the right advisor is probably one of the most important decisions that you will ever make for both yourself and your family use the following checklist as a guide:

  • Your advisor should hold an FSB approved qualification indicating the s/he has qualified as a Financial Advisor in accordance with the FSB and Code of Conduct of the Financial Planning Institute, or similar professional body.
  • Your advisor should have had a long association with an established product provider or advisory firm while being well versed with their philosophy, processes, methodologies and products. Your advisor should have access to well resourced support and extensive knowledge networks.
  • You should be familiar with and confident of the process by which your advisor selects products though his or her advisory firm; including house views, due diligence processes, approval processes and ongoing decisions on who and what product suppliers to use. “A key aspect and differentiator in selecting your advisor is the assurance that with these process’s and investment committees in place all solutions brought to you by the advisor have been through an upfront,  ongoing and robust testing before being approved to be used for the client,” said Sherlock.
  • Your advisor should be able to offer continuity so that should s/he emigrate or move, for example, there are adequate measures in place to ensure that your history is maintained and that you will continue to be supported with long term personal planning.
  • Your advisor should carry Professional Indemnity Insurance. This not only offers comfort should there ever be the great misfortune of needing to claim in the first instance. Secondly, it proves the underwriting insurer is satisfied your advisor not just runs a proper and fitting business but there is no claims history against them or a satisfactory history in the very least.

As your long term relationship with an advisory firm is key to successful financial planning you might ask your prospective advisor to refer you to a few existing clients who can discuss their perceptions and experiences with the firm or individual.

Financial advisors may earn income from both fees (for time and professional expertise) and commission earned by placing products with providers on your behalf, a financial advisor should be flexible enough to provide advice for a pre-negotiated fee, or a fee agreed to the start of each year.

“Given its value, the right financial advice should be viewed as an indispensable professional service for which you should be prepared to pay a fee,” said Sherlock.

Choosing the right advisor is not about negotiating the cheapest fee. Not all advisors or advisory firms are created equal. If you choose your advisor or advisory firm based purely on fees the short term cost saving could become a long term problem, especially if the advice or solution that you are given does not suit your needs, was poorly researched.

In closing Sherlock advised that,

“A professional financial advisor should be able to assist with all aspects of financial planning and provide advice in the form of a written report updated annually as your personal circumstances change and your investments develop.”