The new pension reforms are only months away – is your financial adviser looking after your needs?

24th November 2014

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With the pension reforms coming into effect in April next year, now is a good time to consider and review your investments.

As the IFP’s Financial Planning Week begins, the Association of Investment Companies (AIC) looks at the questions that private investors should be asking their advisers about their investments.

Annabel Brodie-Smith, communications director, at trade body, said: “Investors should always be proactive in monitoring their portfolios, and with the pension reforms coming in April, it’s a good opportunity to reconsider your long-term investments. For those investors using a financial adviser it’s a good time to meet up with your adviser and review your objectives and portfolio.”

Questions for your adviser:

“How often will my portfolio be reviewed and do you know what my objectives are? 

Have you told your adviser what you want to achieve with your money? Instead of simply asking for maximum returns from minimum risk, be specific. This might be a new house or a specific amount of income in retirement. Setting your own objectives, rather than going along with what your adviser believes they can deliver, is key.

“How will the performance of my portfolio be assessed against my objectives and will it spread risk to achieve my objectives?”

Learn and understand the difference between asset classes, such as cash, equities and fixed interest securities. How is your portfolio spread between these different asset classes?

“What benchmarks do you use?”

If your adviser uses benchmarks to show how well your money is doing, ensure you fully understand these. Do they show the likelihood of you reaching your investment objectives? Some advisers will use indices to show how well your portfolio has done, but be sure to ask how they help you achieve your objectives.

“How will you select the individual investments to meet my objectives?”

Does your adviser research the whole market, and if not, why not? How could not researching the whole market impact the likelihood of achieving your objectives?

“What types of investments will be considered?”

For example, will they be using investment companies, open-ended funds, exchange traded funds or other alternative vehicles?

Investors considering financial advice, or perhaps changing their current adviser, can find useful information from the Institute of Financial Planning, using their ‘Wayfinder’ service. Alternatively https://www.unbiased.co.uk is another source for investors looking for financial advice in their area.

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