LEGAL CORNER: Asking the right questions is key to unlocking good investment advice
Certainly, before you instruct any advisor you should check their level of qualification and experience. By law, all investment advisors must hold professional qualifications endorsed by the Financial Conduct Authority (FCA). There is a minimum Level Four for competency, rising to Level Seven for qualification as a chartered wealth manager.
Your prospective investment advisor should also be crystal clear on their method of remuneration. In recent years, significant changes have been imposed on the financial services industry including a more accurate definition of ‘independent’ investment advice as advice taking into consideration the entire investment market place. This is in contrast to ‘restricted’ investment advice, the scope of which is limited to a specific range of investment products.
In the past, many investment advisors received commission, explaining to their clients that commission was paid through the investment product they recommended. Although investors did not receive an invoice for such payments, they were effectively footing the bill for such high-price commissions. Many advisors also received ongoing commission payments for conducting regular performance reviews, whether or not these reviews actually
Under the new FCA rules your investment advisor must justify all charges and provide you with evidence they have indeed undertaken the services for which they have charged.
When you are satisfied with your choice of independent investment advisor, expect to pay a fee for their initial investment advice as well as ongoing fees for regular investment reviews and performance reports. Regular review is very important – with Brexit uncertainties and current low interest rates, many investors could benefit from advice on the advisability of accepting higher levels of risk in pursuit of a higher income.
A good advisor will want to get to know you well and understand your situation in order better to gauge your requirements and your attitude to investment risk. A good ongoing arrangement between advisor and client ensures continuing confidence despite these uncertain times.
If you would like more information about George Ide’s investment and wealth management services, please call our Chichester offices on 01243 786668 or email us at [email protected].