Seeking some financial advice can be a minefield, just deciding who to go to is a difficult decision what with financial planners, insurance companies, sharebrokers, banks and financial advisers. All of these people are happy to tell us where to invest and what to invest in – but how do we know if this in the right investment for us?
We think there are some important questions you should always ask when seeking investment advice and we have listed them below:
1. How do I know what you’re recommending is the best option for me?
When you meet with your adviser you will need to discuss your financial situation. Your advisor should question you about your financial objectives and together you should be able to prioritise these objectives and develop a strategy to achieve these. Your advisor will then put their recommendations in writing, setting out what they’re recommending and why and then you can make an informed decision.
2. What are the risks of this investment?
Whenever we invest money there is always a risk and it’s important to understand this. You should know exactly what the risk level is and what could go wrong. If you are moving your investment to another product then your adviser must tell you the costs as well as the benefits, and risks of the switch.
3. What will I pay?
One of the questions we get asked a lot is how much will it cost me to get some advice. The answer is varied because it really depends on how your advisor works. Some advisers charge a fee, others charge a commission or may receive sales related incentives. It’s important to understand what fees you will get charged and whether this is ongoing or a one off. However any fees or commission that apply must be provided to you in writing in a formal disclosure statement.
4. What information will I receive about my investments?
It’s important to know what information you will receive about your investments so you can see how they are tracking. You should know when you will receive them and understand how to read the information so you can watch out for any warning signs. If your adviser is providing you with ongoing service, ask how often they’ll contact you. Remember things change, so it’s important to review your plans at least once a year.
5. How can I get my money back?
When you are making decisions about your investment make sure you know when you will be receiving any money back. If you have opted for a fixed-term investment you may need to pay a penalty and/or fee to get your money back early. You also need to look out for any restrictions, for example, units in some managed funds can only be sold at the end of a month, or there might be a limited market for some types of products, ask you advisor about all of these so you are informed before you commit.
Choosing an advisor is something that needs consideration but once selected you will probably stay with them for quite some time, so make sure you select the right company and adviser for you. At FDG we understand what is important and have a range of advisers to suit an array of customers so check out our staff page and give us a call.