Choosing who looks after your money is mostly a matter of asking direct questions and noticing how comfortably they're answered. A good firm will welcome the scrutiny.
Start with the register, not the website
Anyone can build a convincing website. Before anything else, look the firm up on the financial regulator's own register in your country, typing the regulator's address into your browser rather than following a link you were sent. Check the name, the licence number and what the firm is actually permitted to do. If the firm isn't listed, stop there.
Ask how they're paid
- What is the total annual cost, in money rather than percentages, on an amount like mine?
- Do you receive commission, rebates or any payment from the products you recommend?
- What happens to the cost if my portfolio grows?
- Is there a charge to leave, and how long does leaving take?
Ask where the money is held
Your money should be held in your name by a regulated custodian or bank, not by the advice firm itself. Ask who the custodian is, whether statements come from them as well as from the adviser, and what protection applies if the firm fails.
Notice how they handle risk
An adviser who talks only about returns is telling you half the story. The good ones explain what could go wrong, how much the portfolio might fall in a bad year, and what that would mean for your plans. Guarantees of returns, and pressure to decide quickly, are the two clearest warning signs.
