Financial Risks, Financial Planner Qualifications and the Financial Advisor

Financial Risks | Financial Arrangements

To get the best out of any meeting about financial risks and financial arrangements, preparation is the key.

Before your first consultation with a financial adviser check through the topics below and have in mind some questions to ask:

Your goals and priorities

What do you want your financial plans to achieve? Try to be as clear as possible. For example, if your goal is early retirement, then what age and retirement income do you have in mind?

Their experience and qualifications.

Financial advisers need to have professional qualifications in order to give advice. These can range from a Diploma, demonstrating a benchmark grounding in financial services, to a full Chartered status, recognition that the adviser has attained and maintains the highest and most prestigious level of professional achievement. In some areas, advisers need additional qualifications before they can make recommendations – transfers involving final salary pension scheme benefits are the most commonly encountered example. If your adviser has not passed the relevant exams, you will have to decide whether to ask them to sub-contract this aspect to an expert or choose another adviser.

Your existing financial arrangements.

Your financial adviser will need as much information as possible about your existing policies, investments and pension provision. You should gather what details you have together and, if any of it is seriously out of date, request an update. Nevertheless your adviser may ask for your written authority to contact the organisations involved.

Your attitude to risk.

If your financial planning involves investment in any form, then your adviser will need to understand your attitude to risk. Your adviser wants to know how cautious or adventurous is your approach to investment. Some advisers use computerised systems to assess risk tolerance based on your responses to a set of questions, but it is still worth thinking about the topic before your meeting.

There is usually a trade-off on risk: the less risk you are prepared to accept, generally the less the scope there is for large profits. And the longer your time scale to when you might need the money, generally the more risk you can afford to take.

Payment for the advisory service.

Personal financial advice is not free, although it may sometimes look as though it is. It is important to remember all the work that has to go on before and after the meetings with the adviser – such as researching and monitoring the product and investment markets, obtaining information from product providers, arranging investments, insurances and other financial products and then looking after them.

Your adviser will have to clearly explain how much their services will cost.

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