Introduction
Choosing the right financial adviser to help with your retirement planning is one of the most important decisions you will make. However, with around 27,500 regulated financial advisers in the UK with various job titles, narrowing the search to find the right one can seem daunting.
Below, I share the best questions to ask a financial adviser in 2024.
1. Do you specialise in helping those planning for retirement?
This question is the most important to ask if you are planning for retirement. Does the financial adviser specialise in retirement planning, or do they offer general financial advice, taking on all clients irrespective of their requirements? If they are generalist financial advisers, will they really provide the same service as someone who deals with clients planning for retirement daily?
To use a medical analogy, if you require heart surgery, will you get the best outcome working with a cardiac surgeon or a General Practitioner (GP)?
Nobel Prize-winning professor William Sharpe described retirement income planning as the 'nastiest, hardest problem in finance':
'The only way you can look at the retirement problem is through probability. You can’t look at it not with probability. Everywhere you turn there are probabilities: of inflation, of market performance, or mortality. It’s true that you don’t know the range of possible outcomes for next year, let alone 40 years from now. But you try to come up with the most credible set of probabilities that you can.'
We would be the first to tell you that nothing in the investing world is certain. However, we are confident that by engaging with a retirement planning specialist who works with people just like you and:
Follows a clearly defined process (detailed in 5. Can you describe your retirement planning process in detail?)
Uses best-of-breed retirement planning tools.
you will put yourself in the best position to have a successful retirement outcome.
The easiest ways to check if the financial adviser you are speaking to is a retirement planning specialist?
1. Check their website!
Is the website wording and offering targeted towards those planning for retirement? For example, the Pyrford Financial Planning website clearly defines who we work with.
2. Call them!
Most financial advisers will gladly give up half an hour of their day for an introductory phone call to see if they are a good fit for your needs. Some questions you should ask include:
What clients do you specialise in working with?
2. Are you Independent or Restricted?
It is essential to understand what financial products and providers the financial adviser you are considering can recommend.
Independent financial adviser
According to the FCA, an independent financial adviser:
'can consider and recommend a wide range of retail investment products that could meet your needs and objectives. Independent advisers will also consider products from a wide range of firms across the market, and will give unbiased and unrestricted advice. An independent adviser may also be called an 'independent financial adviser' or 'IFA'.'
Restricted financial adviser
There are effectively two types of restricted financial advisers:
1. One that offers a subset of available financial products in the marketplace. For example, they might not advise on Venture Capital Trusts (VCT). However, they still consider a wide range of financial providers within this product subset. Firms operating in this mode may be known as restricted whole-of-market.
2. One that offers a wide range of financial products but does not consider a wide range of providers for these financial products. These advisers are known as restricted.
The FCA has the following to say:
'A restricted adviser or firm can only recommend certain products, product providers, or both.
The adviser or firm must clearly explain the nature of the restriction. If you are not sure about the offer you should ask for more information.
Some examples of restricted advice are where:
the adviser works with one product provider and only considers products from that company;
the adviser considers products from a limited range of product providers;
the adviser is unable to review existing products that you may already have in place.
Restricted advisers and firms cannot describe the advice they offer as 'independent'.'
''If you ask 'do you offer independent financial advice' and the answer is anything but a clear 'yes' then reject them. Many work for a bank or insurance company and of course only recommend you buy their products. That is just sales masquerading as advice.”
MoneySavingExpert echoes this view.
“If you're using an adviser, always, always make sure it's an independent financial adviser.”
3. How many clients do you have?
There is no doubt that technology is helping financial advisers to do their jobs more efficiently. The right financial planning tools save a lot of time. Couple that with a switch to online meetings, and you can see where time savings can be made. That said, we believe that it is challenging to support a meaningful financial planning relationship with more than 100 – 150 clients. When you consider client meetings, preparation for these meetings and the ongoing financial planning relationship, it is easy to see how a financial adviser's time can be used up.
Questions to ask:
How many clients do you look after?
What is the scale, scope, and frequency of your client interaction?
4. How much will I pay?
We cover financial adviser charging structures in 'How much does a financial adviser cost for retirement planning (and am I getting good value)?' It's fair to say that it's sometimes difficult to work out how much you are paying, but given the impact of fees on retirement income sustainability, it's something you need to understand fully.
Questions to ask:
Can you give me a breakdown of the total fees for both initial and ongoing financial advice in pounds and pence?
How much am I paying for each part of the chain, and how do you justify this?
Financial adviser
Platform
Fund manager
Fund manager transaction costs
Discretionary Investment Manager (where applicable)
How will your fees impact how long my retirement investments are likely to last?
Do you charge exit fees?
Do you get paid for giving me financial advice even if I do not proceed with your recommendation?
How much will a client typically pay relative to me if they have half/twice what I have invested?
5. Can you describe your retirement planning process in detail, and what are your specific retirement planning qualifications?
One of the benefits of working with just those planning for retirement is that we can develop and implement an efficient retirement planning process, saving clients time and money. We believe there are five key stages of planning for a successful retirement, and it's essential that you understand what the financial adviser you are speaking with is offering.
Questions to ask:
Can you describe the stages of your retirement planning process and how much time/effort is typically spent on each stage?
Can you provide me with a detailed document describing your retirement planning process?
How do you ensure the financial plan is robust? Are there typically several iterations, and what 'what-if scenarios' do you typically create?
What software do you use to make your job easier?
What financial planning qualifications/expertise do you have? Both James and Noel are Certified Financial Planners™, widely considered the global gold standard in financial planning. In addition, Pyrford Financial Planning is a CISI Chartered Firm™.
6. What is your investment philosophy?
It is key to understand the investment philosophy that the financial adviser you are considering working with follows. A summary of Pyrford Financial Planning's investment philosophy is detailed here.
Questions to ask:
How does your investment philosophy align with your retirement planning process?
Do you use low-cost index funds?
Will you create a portfolio that will outperform the market? If the financial adviser answers yes, you might want to dig deeper, considering what their investment managers compete against.
Do you have an investment committee, and can you describe how they work?
Do you invest your own money in exactly the same way as you are recommending to me? If the answer is no, it's worth finding out why.
7. What happens if you get run over/what are your retirement plans?
You should plan to work with the same financial adviser for many years as they help guide you through retirement. However, there is always the chance that the financial adviser you are considering working with may unexpectedly be unable to work due to illness or decide to retire. This may be fine if you are working with a firm of many financial advisers (and you can find another adviser in the firm you are happy working with), but less so if you are working with a 'one-man band'.
Questions to ask:
How many financial advisers does your firm have? If the financial adviser is a sole adviser, it's worth understanding the locum arrangement.
How many years do you plan to continue working as a financial adviser? When you finish working, will you sell the business (if so, who to?), and what will happen to your clients?
Conclusion
When meeting a financial adviser for the first time, don't be afraid to ask tough questions, and keep pushing until you are satisfied with the answers. You will probably be working with the adviser for many years and paying them fees. A financial adviser should welcome any questions you have.
Next steps
If you are planning for retirement and want to discover more about our retirement planning service, please get in touch.
About us
The team at Pyrford Financial Planning are highly qualified Independent Financial Advisers based in Weybridge, Surrey. We specialise in retirement planning and provide pension advice, investment advice and inheritance tax advice.
Our office telephone number is 01932 645150.
Our office address is No 5, The Heights, Weybridge KT13 0NY
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Although best efforts are made to ensure all information is accurate, you should not rely on this blog for your personal situation or planning.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.