How to choose a financial advisor: do’s and don’ts.

How to choose a financial advisor

When discussing investments and finances, whatever my views, I always complement them with “But you should consult a financial advisor to discuss your specific situation”. After all, we don’t rely on the internet and tips from friends to manage our health – we go to medical doctors. Likewise, it’s important to talk to specialists for customised advice on how to keep our finances healthy.

But, as with doctors, it’s not always easy to choose one. Here are a few tips on how to hire a financial advisor.

Recommendations are a good place to start.

Talk to people whose stage in life, financial needs and outlook are similar to yours. The best financial planners will have competent advice for people of all ages or situations, if your advisor has many other clients with a similar profile to yours, he/she is more likely to be up to date on the most relevant investments and laws for you. A financial advisor who works with many ex pats, for instance, will be familiar with QROPS, offshore accounts, tax domicile and residence laws and with global investment portfolios, whereas one who focuses on domestic investors might spend a lot of time finding the best SIPP and ISA options.

Do your own research.

In addition to recommendations, search the web and local associations of financial advisors. Some finance advisors also publish columns or blogs, give interviews and participate in forums. Put together a list of a few that appeal to you.


You only want one financial advisor, so it’s important to choose well. Rather than go with the first one you talk to that seems ‘OK’, or whomever your friend works with, talk to a few to get a feel for the differences. Ask them about their background, methodology, specialties and views on the market. On this last point, remember that to a non-specialist, virtually anybody working as a full-time financial advisor will be able to sound knowledgeable when discussing investment options. So focus more on the other points. Is their background solid? If financial advisory is regulated in your region, do they have the necessary certificates or licences? Did they explain clearly how the financial planning and advice process works? Did you ‘click’ with them? That’s more important than “He seems to know an awful lot about finance”.

Another issue to consider is experience.

Personally, I suggest you choose someone battle-tested. That doesn’t mean they have to be older, or that they can’t have started their own firm recently. But it does mean that they should have seen both bull markets and bear markets, high interest rates and low ones, in order to understand, not only rationally, but at a deep level, that the world and financial markets can look very different from how they look right now. It also means that they are more likely to have felt the pain of having made a bad call and lost money, and learned from that experience.

Understand where their financial interests lie.

Financial advisors can earn their money a variety of different ways, both in terms of the services they offer and in terms of how they charge for them. Understand what services they provide. All will provide financial planning and advice. But how in-depth is that advice? Is it just generic information or an in-depth plan? And are they also fund managers? Stock brokers? Insurance brokers? Real estate agents?

Regarding the core service of financial advice, some simply charge their clients a direct fee for it, either as a fixed yearly amount, a percentage of assets being managed, or both. Others don’t charge clients directly, but earn commissions on the management fees of the funds they invest your money in. So, for example, they might advise you to invest in a given equity fund that has a 2% management fee, and that fund, in turn, might pay them 0.5% out of that 2%. Others who promote real estate investments are essentially real estate brokers who use financial advice as side-business to bring in clients. There is no right or wrong way, but consider how their interests might influence their advice, and if that’s OK for you.

Make sure that what they will charge you is fair.

Whether they are charging you directly or indirectly, make sure you are being charged a fair amount. Compare fees across the advisors you are considering. As with doctors, you may well not want the cheapest option, but make sure you are comfortable with what you are paying.

Do your due-diligence.

Once you have found an advisor who fits your profile and whose fees and incentives you are comfortable with, do your homework. Scam-artists aren’t as common as Hollywood films would have you think, but visit your advisor-to-be’s offices, ask to meet his or her partners and employees (unless they are independent, which is normal too), check their certifications and licences, check the internet for complaints, lawsuits or bad press and talk to other clients.

As you can see, finding a good financial advisor involves some effort. But it’s worth it. A trustworthy financial advisor is not only a technical specialist, but a partner you can rely on for some of the most important decisions you will make in your life.


Chris has 9 years’ experience as a UK pension specialist and licensed financial advisor. He specialises in helping clients make balanced financial decisions to grow their personal wealth.

Chris is licensed with Holborn Assets, an award-winning international financial advisory firm established in 1999, with 10 offices and 15,000 clients worldwide.



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