10 Questions You Should Ask Your Investment Advisor

Google+ Pinterest LinkedIn Tumblr +

If you’re in hitting 30 or are already in your early thirties, you might have noticed that more and more of your friends are talking about investing, optimising your CPF, or even retirement. You’re also at the age where your finances are changing rapidly. Your salary might start to be more significant, but so are your financial responsibilities.

Be it to boost your savings or to maximise your returns, it is better to get a head start on your personal finance. It is the right time to review your past mistakes and see what you can improve on. Having savings is always a great idea but if we’re not investing them correctly, they won’t grow. And with the rise of living costs each passing year, it becomes imperative that we invest our finances correctly.

Many of us will seek professional help when it comes to investments. These professionals will have varying degrees of qualifications. Before you lap up everything an investment advisor has to say and offer, here are a few questions you need to ask to better understand what you’re getting into and how it can benefit you.

Suggested reading: Be Thrifty Now to Thrive in Your 30’s

1. What is your experience?

This question should be asked right off the bat. Don’t hesitate or feel awkward asking this question. A financial consultant is supposed to be a certified professional and asking them about their qualifications and experience is something you must do.

2. What are your typical clients like?

It is important to know what type of demographic your investment advisor deals with. Are they people your age? Are their needs the same as yours? You’re investing your hard earned money so it becomes extremely important to know whether your advisor handles your type of needs on a regular basis and had enough experience handling such type of needs from similar like-minded investors.

3. How much do you get paid for selling me this product?

One of the most important questions you can ask an advisor is what they stand to gain from selling you a particular product. Many a time, investment advisors are incentivized to sell you a particular product. While there is no harm in getting paid for selling something, pushing the wrong product to you to make that commission is when things begin to go sour. When you have this information, you can understand why someone’s selling a particular product so hard.

4. How do I build my portfolio?

When asking this question, do some groundwork beforehand. You need to know certain benchmark figures such as the rate of returns on Singapore Savings Bonds (SSB). Knowing these benchmark figures will allow you to gauge how efficient and competent your advisor is. Making changes to a portfolio will require your advisor to know how to protect your interests and whether or not you’re on the right track to meeting your goals.

5. How long do you plan on being an investment advisor?

It might seem like a personal question but when your advisor is planning out your investment strategy for a prolonged period of time, it makes sense if he were around to steer it in the right direction and make any corrections as and when necessary. If your advisor plans on retiring or moving onto another career venture, you’re not paying for the services of an advisor, you’re paying for a consultation fee.

6. Why am I getting these investments and how much will it cost me?

It’s important to know why you’re getting a particular product. While some advisors will try and sell you products for the commission involved, others might ask you to change or drop a policy entirely. What makes sense to them may not seem like sound financial sense to you. Never hesitate to ask why you’re changing or picking up a particular product especially since it’s your hard earned money. Also, investing typically incurs a fee. It could be a percentage of the transaction, but may also have minimum fees. Ask your adviser to give you exact numbers on how much you will be paying when you buy and sell based on varying transaction amounts.

7. How much time would it take for me to start seeing returns?

Figuring out how long a particular product might take to start generating returns is crucial in deciding the worth of a particular product. There’s no point waiting for a product to start generating returns ten years from now when you can opt for products that give you returns starting tomorrow (figuratively).

8. How often do you communicate?

Communication is a big aspect that would determine the success of your financial plans. Will your consultant keep you in the loop and abreast of current changes in the market? Will they update you on any new avenues that might seem like a better fit for your portfolio?

Additional read: 7 Habits of Successful Investors

9. What is the exit strategy?

Imagine, if you would, an investment you made has been draining your finances. You want to get out of it but are told that there is no way you can without forfeiting some of your money. Now you have a choice, exit and lose money or stay in and add pressure on your strained income. Don’t you wish you had asked your advisor what would happen if you wanted out?

10. Can you give me that in writing?

Now, this is a very important question because some advisors may tell you that you are bound to make X amount if you invest in a particular plan. If they are pitching you a product and saying that you are guaranteed a certain amount of return, ask for it in writing. This will help you get what you were promised, especially if the advisor tries to deny any commitments to returns subsequently.

The above questions are not exhaustive but are vital to the health of your investments. They will help you get a clearer picture of what exactly your investment advisor is asking you to do and how it can stand to benefit you.

You may also be interested in: 5 Questions to Ask Before Purchasing a House

Do you have other tips on engaging with investment advisors? Share them with us in the comments!



Leave A Reply


Request received - loud & clear!
Returning you to where you were...