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Questions you should ask when taking financial advice

In my business, when I think about what’s important for clients, it´s about getting to the heart of the most important issues and understanding the most pressing concerns, be that now or in the future.

To do this, it’s important to ask the right questions, both of yourself and your financial adviser.

Here’s my list of important questions, there are lots more I am sure, but these are what I believe you should start with:

Questions to ask yourself:

  1. Do you know your income after tax per year and what you spend and save (if anything)?
  2. What is your current net worth (liquid and illiquid assets)?
  3. If you have debts, what are they, what interest rate are you paying and are there ways you can borrow more efficiently?
  4. Is there anything you want to do or accomplish in your life?
  5. Do you have a contingency fund?
  6. If anything happens to you, will your family know what to do and will they be able to locate a copy of your Will? You should make a list of key contacts, list of bank accounts, investments, pensions etc. etc.
  7. Do you have a current Will? Are the people named as beneficiaries in your Will still the ones you want?
  8. If you are under state retirement age, what State Pension will you be entitled to and when? Can you pay extra to top your pension up so you will receive more when you retire and would this be a worthwhile thing to do?
  9. If you have children/grandchildren, would you like to be able to help them with university costs or give them money towards a car or a house deposit in the future? If yes, you could consider a savings plan.
  10. Will you have, or do you have, enough to retire when you want to and at the standard of living you want?
  11. What is your risk tolerance, how much risk are you taking right now? Risk is not necessarily your enemy as it can be beneficial to you, but it needs to be managed as much as possible.
  12. What about IHT in the UK and country you are tax resident in, do you know what you or your beneficiaries are liable to pay in each country? If not, ask your adviser.
  13. If you have investments and or private pensions do you understand them? If not, ask the adviser how they work.

Questions to ask a financial adviser:

  1. What is their experience as a financial adviser?
  2. How long has the company been operating, what is the size of the company, how many offices do they have and where?
  3. How many advisers work for the company in your area?
  4. You should clarify their regulation, compliance and professional indemnity insurance
  5. What is their financial background and qualifications?
  6. Is there a legitimate way to reduce your income tax and/or IHT liabilities?
  7. Can you name beneficiaries under your investments, these can be different to the beneficiaries in your Will?

Information to give your adviser:

  1. Your current asset allocation, with all the things you own.
  2. With regard to investments, be that financial or property, you should show your rate of return over the years. This is likely to be easier for financial investments. For a house you will need to factor in all expenses, including improvements, mortgage repayments, insurance payments, taxes etc. and not simply look at the appreciation of the value of a property.

Some of these questions, and more importantly there answers, will be tricky, but each is worth considering if you are to get the best from your savings, investments and financial advice.

Lastly make sure you enjoy yourself – life is too short, health can be a fragile thing, don’t put off things for the future that you can do now.

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