In this lesson you will learn 💸
- When the right time to get a financial advisor is
- What you should look for when approaching a financial advisor
- How to decide which aspects of your finances you would want additional support on
When is it the right time to get a financial advisor?
Here are three examples:
Pension strategy
When you intend to sort out your pension strategy
Buying a house
If you intend to buy a house or flat in the near future
Financial plan
When you're making big changes to your financial plan, and you're not sure of the extent to which it might impact your current financial situation
All of the above are moments when it really pays off to get external financial advice. A financial advisor is also helpful when you want to check if you are already doing the best you can with your money - if you've made it this far into Money School, we bet you'd be surprised at how much you've already strengthened your finances!
Frequently asked questions ⁉️
Next up are some common questions we get asked about choosing a financial advisor, as well as our answers...
What should I look for when approaching a financial advisor?
First, check the financial education of your advisor. Anyone can call themselves financial adviser, the professional titles are not protected. The educational qualification should be state-recognised, either by the Federal Government as education authority or by the Finma. A list of recognized qualifications are listed in this article.
Should I choose a big-name company or support a small one?
It depends what’s more important to you. A big firm is more likely to be able to secure your wealth, as it’s strong enough to handle adverse events and negative market conditions. They also have more resources to invest in detecting and stopping fraud and protecting your data and privacy online. But will you get as personal a service as with a local financial advisor who can take a bit more time to understand you? If you prefer a small firm, at a minimum you should check how well they protect customers’ money, and make sure they will be accessible and well-deputised in their absence.
How should I approach the discussion with them?
Whether you’re meeting them in person or it’s a phone call, you should try to be clear and honest with yourself about the state your finances are in, and what you want to achieve. Completing a budget plan can help. And ask yourself what assets you own, how much of your money is tied up in property, car or other investments, and what debts or obligations do you have – from mortgages to credit cards. Gather this information so you have it to hand if you decide to share it.
How will they charge me?
That depends on what sort of advisor you have. If they are paid on commission from financial companies, they may not charge you at all – but then you may pay by receiving less impartial advice that doesn’t work to your advantage. IFAs may charge you for each transaction – such as investing in an asset or setting up a service – or an ongoing annual or monthly fee. They may even charge a percentage of your investment. Ask for a variety of fees from different financial advisors so you can compare them properly.
They may not be able to give you an exact figure upfront, but they should be able to give you an estimate – or at least an upper-limit figure. And once an investment proposal is made, all costs should be made fully transparent.
Tip 📌
Always ask to see total costs, not just percentages or basis points (fractions of a percentage), to make sure there are no hidden fees.
The pricing can be very confusing – make sure to ask as many times as necessary, and most importantly, make sure you get an indication of the expected “net return” you could achieve with their advice: that is what your invested money is expected to bring minus the fees you will be paying for the financial product and the advice.
Get referrals from friends
It’s worth trying to go with a recommendation from friends or family who have successfully used the advisor, or be stringent looking at online reviews, and checking the financial strength and reputation of the firm or institution you are using.