Choosing a Financial Adviser
Last updated: 3 March 2018
Follow Experts for Expats >
"If an adviser is using fear to get you to sign their agreement, take a step back and, again, get a second opinion."
When you move abroad, one of the questions that you will often ask yourself is "how do I ensure I'm managing my finances in the most tax efficient manner possible".
Just like in your home country, seeking professional advice from experts is vital when it comes to managing your finances to ensure that you're on the right side of the law while remaining as tax efficient as possible. Unfortunately, when it comes to finding the best financial adviser there are steps you can take to ensure that they have your best interests at heart, and not find ways to separate you from your money.
What is a financial adviser?
The first thing to establish is what exactly is a financial adviser?
A financial adviser, by definition, is someone who provides advice to an individual or company on how to manage their money. They will often be involved in setting up and managing pension funds, managing full investment portfolios and even help structure assets to ensure that they are not exposed to unnecessary tax.
As with any profession, their desire is to earn a living and one of the common complaints regarding financial advisers will quite often be that they offer or sell financial opportunities which may not be in your best interest, but actually provide them with the largest income.
In most countries, financial advisers are regulated by an authority, such as the Financial Conduct Authority (formerly the FSA) in the UK. These governing bodies ensure that each and every adviser acts in the best interests of the individual and provides some level of reassurance for the individual concerned.
The importance of being an independent financial adviser
Independent financial advisers (or IFA) are, by name, not affiliated to any particular financial products or services. This is important because it should enable them to review the full range of financial products and services, rather than being limited to only offer what any one or more particular company offers.
It is important to seek advice from an independent financial adviser so that you are not restricting your opportunities - which could have a detrimental affect.
How to choose the right financial adviser for you
Relationship building and trust
As with any professional advisory service, each adviser is unique. In many cases, simply providing sound advice is often not enough. It is also important that you are able to build a personal relationship with your adviser.
If you consider that some investments will be extremely long term, while others not so. But what you don't necessarily want to be doing is transferring your assets from one product to another because you've had to change adviser, again. It is likely that with every transfer, the adviser will take some form of commission as payment. When you are able to build a relationship with your adviser, your adviser will be able to understand your personality, risk profile and also be able to make decisions on your behalf, if you so wish.
Once that level of trust is established, much of the pressure of keeping an eye on your assets will be removed, and you can simply reap the rewards that come in.
Sorting the wheat from the chaff
There are thousands of professional advisers around the world. Some are exceptional, some are little more than estate agents who now sell financial products.
So how can you spot the good from the bad?
The first thing you can do is some due diligence on their existing clients. Before you undertake any formal agreement, ask to speak to at least two of their existing client base to find out all you need to know. Beware of those who either cannot or do not wish to provide you with references.
It's also important that you don't simply go with what is on the websites and you speak to the people directly. While time consuming, it might just enable you that additional peace of mind before making a decision.
Secondly, and probably most importantly, don't go with the first adviser you come across, even if they seem perfect. Quite often, the best salespeople can fool anyone, so the safest option is to get a second - or even third - opinion on any advice. Most advisers will offer a free consultation up front to enable them to understand more about you. Take advantage of this.
Thirdly, if they claim to be regulated, make sure you double check on the register. And even then, if you or they are not in the jurisdiction of the regulatory body, it may not mean anything anyway. But at least you know that they are regulated someone.
Finally, don't just go with the cheapest or most expensive. When you evaluate the agreements and costs, ensure you know everything and get it in writing. It's far more important to be cost effective in the long run than keep costs low - or go with an expensive option because the price is a guide of quality.
Don't be driven by fear
Whether you currently have a financial or not, making snap decisions normally ends in some kind of disaster. If an adviser is using fear to get you to sign their agreement, take a step back and, again, get a second opinion. You should never be rushed into a decision which could have a major effect on your long time financial health.
Similarly, if your investments don't come up to scratch, rather than making a snap decision, meet your adviser and talk to them before making any decisions. All investments come with some degree of risk attached - and there is no such opportunity which is a sure thing. Even the best advisers can get it wrong. The key is to work together to mitigate these risks as much as possible.
Too good to be true?
Last and by no means least, if something appears too good to be true, it quite possibly is. Get a second opinion if you are in any doubt.