Are you getting valuable financial advice?
Is your financial advisor going to get you there?
06:23 09 December 2013
Getting the right financial advice from you advisor is essential to ensure you are making sound investment choices.
Recently, how investors obtain financial advice in the United Kingdom received a massive overhaul. Free consultation with professional advisors has now been replaced by mandates, which state that all consultations must be fee–based. Ideally, this mandate dubbed the Retail Distribution Review (RDR) was designed to eliminate the recommendation of third party products and services based on endorsements.
Investors now must pay an hourly rate or percentage fee rate in order to obtain financial advice. The review was designed with the goal of providing investors with a clear unbiased understanding of the cost of investing. However, it has led to the question of how to determine if you are getting your money’s worth.
There are a few questions you can ask your advisor to help ensure you are getting the best financial advice for your money.
- Take a good look at the fees. Are you looking at a per hour cost, a contract, or a percentage of the value of total assets that they handle?
- If your advisor is requesting a percentage fee check to see if it applies to all of your assets (cash in the bank and other assets) or just the ones managed by that particular advisor.
- Make comparisons – are your numbers adding up? Compare your numbers to the average performance for the particular sector you have invested in. Are you seeing the performance you should?
- When getting financial advice make sure to keep in contact with your advisor. You need to ask this before you begin a relationship. What is included in the fee? Are you charged for every contact or just for scheduled meetings?
There are numerous questions you should ask when obtaining financial advice. These are just a few you should consider when getting started.