A financial advisor is a counselor that provides clients with services that help to reach their financial goals. This role suggests searching the marketplace and finding the most appealing products that match the clients’ interests. When you get your first paid cheque, the idea of planning around your finances looks like a necessity. With all the challenges life keeps on imposing, you find yourself compelled to assign an adviser that will customize a unique financial plan on a reliable basis.
This plan must guarantee to make the best of the money you earn, giving you the chance to secure investment, save money for a big purchase, or even just organize your finances to meet all your expenses or to cut it. It will assess if you are still on track and where to go next. Your plan will include a list of your goals and the time estimation you’ll get to achieve them.
Short-term goals are those you hope to achieve in the next five years, like buying a car.
Medium-term goals are those you hope to achieve in the next 10 years, like starting your own business.
Long-term goals are 10 or more years away, like college for children or retirement.
A significant part of financial planning is foretelling the timing and the amounts of money coming in and spent out over a while. These calculations can play a significant role in helping you to make the best decisions for your fortune anytime. Try our Retirement calculator or Education calculator.
In some countries like UAE, with the country’s progress witnessing businesswise, a financial adviser is a must because he will guide you to achieve your financial goals in a more structured and consistent manner. Here are seven questions to ask your financial advisor in the UAE, but still you need to ask yourself the most important question first.
What type of help are you looking for?
7 questions to ask your financial advisor whom you are willing to work with!
1- Do you work at an authorized company?
In UAE, three primary regulators cover all different areas. These are:
- Insurance Authority: controls all insurance companies, brokerages, and insurance-related products (excluding health insurance)
- Securities and Commodities Authority: manages the investment world, including fund houses, investment counselors, stockbrokers, and others.
- Dubai Financial Services Authority: controls financial services that are transacted by Dubai International Financial Centre. DFSA is considered to be the best party to organize your finances and protect your rights as a consumer.
The most important thing for you here is to assign an advisor certified by one regulator, or else you won’t be able to issue a formal complaint against any illegal actions from their side.
2- Are you well experienced?
Although it might seem awkward to ask this question, it’s crucial to check out the person’s qualifications regulating your money. You should lookout for the following:
- Chartered Insurance Institute – CII is a significant certification for financial planners and insurance brokers in the UK. It is going to be obligatory in the UAE for advisers who are regulated by the IA. Try to find an adviser that holds level 4. Advisers in the UAE tend to have post-nominal letters like ‘DipPFS’ or ‘DipFA,’ not CII.
- Chartered Institute of Securities & Investments – CISI clearly, has to do with investments attained by wealth managers and investment managers.
- CFBoard – obtained in the US but reputable internationally. Any financial adviser with a Certified Financial Planner certificate means they’re one of the best in the field.
Of course, these were few examples of the licenses an advisor could be holding. However, if you found a “Chartered” adviser, it means they have maximum qualifications in their field.
3- Do you have a good reputation?
You will find the answer to this question online. It’s not a total confirmation, yet Google reviews can support you with some information from a previous client whom this adviser has worked with.
Also, the adviser’s LinkedIn profile would tell a lot about their professionalism. Scroll down to check for their testimonials from actual clients. Look for advisers sharing their expertise through articles, taking videos, or even stating an opinion.
Company’s website; another way to gather information is to check the company’s profile before you make up your mind.
4- How much money should I pay for a bit of advice?
Advisors are paid through commission or fees. The fee-based method is obviously more efficient for clients. Financial advisors who accept commission are visualized as salespeople, apparently, for their best interest, not clients. However, some authentic advisors receive a commission. Keep in mind; they’re only trustworthy if they are straightforward about the cost of their advice.
Most of the investment plans in the banks are extremely expensive. It would be impossible to make any profits as some plans start with 3% to 7% charges for the first year. There are some companies though, like Wealthface where you can get professional advice for free.
5- How do you set an advisory plan?
The financial advisor must:
- Collect all the database about you, your family, your lifestyle, and goals
- Carry out a good analysis of your current financial situation
- Look through the market for the appropriate products
- Arranging a complete financial report that deals with all the supplied information, advice, and the reasons that prove its validity. This is going to be a detailed description, so everything is clear for you.
- If it pleases you and you wish to proceed, you will need to review the plan twice a year or even as more as you decide with your adviser
You have to keep in mind that you have many questions to answer during this financial consultation.
6- Does the product match your performance expectations ?
To reach your financial goals, an advisor should come up with a product solution that gives you desired return and matches your risk appetite. Before signing up for an investment plan, check the fund provider. Investment strategy is the central core of a fund manager’s work and often refers to the difference between a fund’s success and failure. Therefore, review a fund’s performance from the year-to-date to the 3-year, 5-year, and 10-year timeframe and compare it with the benchmark. It is not a guarantee of your future returns but you can see the management success over the years.
7- What are the fund charges?
You will pay charges for the advice, directions for using a product, and demands on underlying funds (hidden on purpose), so here is a free advice, set it all clear from the beginning.
After paying 3% to 7% charges upfront for the advice you must also ask your adviser about charges you’ll pay for being in a particular fund. You might come across the terms Ongoing Fund Charge or Total Expense Ratio in funds. This includes the cost of running the fund that they will make you pay for as an investor. If this TER is higher than 2.5%, it might essentially diminish your returns. Ask for a full explanation before giving in.