Think financial planning is for the rich? Think again. A financial planner doesn't cost as much as you think and could save you thousands in the future. Not-for-profit organisation the Chartered Institute of Securities and Investment (CISI) has come up with 10 questions to ask a financial planner, so you can help them to help you be good with your money.
But what does a financial planner actually do?
The Chartered Institute of Securities and Investment (CISI) may sound rather lofty but in essence they can help you get the financial advice you need, at the different life stages you need it.
Last week was Financial Planning Week, so the CISI conducted research through YouGov which revealed only 7 per cent of people would trust their bank when it comes to seeking financial advice.
In contrast, 41 per cent of people would trust a financial adviser; 22 per cent would trust a good friend or relative and 26 per cent would trust only themselves.
Choosing a financial planner is a decision that should not be taken lightly as it will almost certainly affect your financial future. It is important to ask a series of questions to ensure you find the most competent, trustworthy and qualified professional who is best suited to your needs.
Although it will take you more time, before you meet up with any adviser or planner it's a good idea to contact at least three different firms so you can get a much better idea of the differences between them as a result. It's also important to be clear on exactly what service you are looking for the adviser or planner to provide for you. In some ways interviewing a potential planner is similar to interviewing a person who is applying for a job you've posted.
Make sure you have a good understanding of the planner's qualifications and if they are a qualified planner. Check if they hold any advanced level professional credentials.
Experience is an important consideration in choosing any professional so don't hesitate to ask how long the planner has been in practice, the firms they have been associated with and how this experience relates to their current practice.
The services a financial planner offers will vary and depend on their credentials, areas of expertise and the firm for which they work. Some planners offer financial planning advice on a range of topics but do not sell financial products, while others provide advice in specific areas such as taxation.
Those who sell financial products, or who give investment advice, must be authorised and registered with the Financial Conduct Authority (FCA).
The types of services a financial planner will provide will vary. Some planners prefer to develop detailed financial plans encompassing all of a client's financial goals. Others choose to work in specific areas such as taxation, estate planning, insurance and investments. Ask whether the individual deals only with clients with specific net worth and income levels, and whether the planner will help you implement the plan they develop or refer you to others who will do so.
It is quite common for a financial planner to work with their team to provide the full Financial Planning service to you. You may want to meet everyone who will be working with you and this will often involve Paraplanners. These are professionals who work to support the Financial Planner, providing technical research and backup as well as report writing and analysis.
Financial planners who sell financial products such as investments must be regulated by the FCA. Since January 2013 all retail investment advisers must have a Statement of Professional Standing(SPS) from an FCA accredited body such as CISI. You should check that both the firm and the individual adviser or planner are authorised by the FCA. You should also ask whether the advice they give when it comes to recommending financial products is independent or restricted. Independent advisers have a duty to research products across the whole of the market.
9. How often do you review my situation?
Good financial planners will make sure that they review your situation at least annually. Many will do so more frequently, but a thorough review once a year is sufficient to ensure that your plan keeps up to date with your changing circumstances.
10.Can I have it in writing?