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How do I choose a great financial advisor?

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If you are looking for advice on financial planning, retirement, investment, tax or purchasing a home it is often smart to talk to a financial advisor who can help. Also known as a financial planner, financial broker or wealth manager.

The challenge though is which financial advisor to choose?

As an industry insider, who helped run these services at one of Ireland’s leading banks, I saw this from the advisor’s angle. But as someone who actually used financial advisors for my own financial planning, I recognised this was also a big challenge for Irish consumers. Getting the right money advice is important.  

Choosing the best financial advisor 

The quality of advice you receive can make a big difference to your financial outcomes and therefore your life outcomes. So it is an important decision worth researching carefully.

The financial advice world in Ireland is quite murky, full of confusing and sometimes misleading terms, unclear commission arrangements and limited online pricing information. A recent survey said that over 50% of Irish people didn’t think their advisors had their best interests in mind and 61% thought their advice was commission driven. [1]

Although there are many great advisors in Ireland who deliver a great service for their clients, the light touch regulatory approach in Ireland, puts the weight of picking a great advisor firmly on your shoulders as an Irish consumer. 

To help you make the right choice, in this article we will cover your financial planning needs, the types of financial advisor and their pro’s & con’s.       

Understanding your financial advice needs

How to choose the best type of financial advisor for you

4 key things to look out for in picking your financial advisor

How do moneysherpa rate financial advisors?

Financial advisors, next steps

Understanding your financial advice needs

The type of advisor that’s best for you will depend on your particular advice needs. Not just the subject of the advice, retirement, investment, mortgage etc.. or the size or complexity of the advice.

Most agents are able to cover all of these bases successfully, the key to finding the right advisor is understanding how much of an active role you want to play in your financial decision making. 

A recent study by Forrester split people seeking financial advice into three broad types [2]

  • DIY’er, confident in financial ability and happy to go it alone.
  • Validator, confident in overall financial direction, but want to check and fine tune with advice.
  • Delegator, less confident or time poor, but know financial planning is important so outsource it to someone they can trust.

Which type you are is probably the single most important factor in choosing the right type of financial advisor for you.

How to choose the best type of financial advisor for you 

There are three main types of financial advice available in Ireland, each more or less suited to DIY’ers, Validators and Delegators.

Robo advice

  • Best fit for: DIY’ers who don’t need require one on one advice and like the low fees.
  • What is it: Automated data driven financial advice based using algorithms and artificial intelligence to assess client needs and recommend best financial strategies.
  • Pricing: Low/No cost advice fee model, typically less than 1%.
  • Providers: Growing quickly in US (betterment) and UK markets (mint), still limited choice in Irish market

Independent advice (whole market, fair analysis)

  • Best fit for: Validators with large or complex financial requirements, looking for once off upfront focussed advice.
  • What is it: One on one advice, based on needs and evaluation of all financial options in market.
  • Pricing: Varies, but mainly upfront fixed fees of €2,000- €5,000, not subsidised by commission on products sold.
  • Providers: Typically, specialised firms due to high cost of regulation and providing depth of advice. 

Focused advice (multi-agency, restricted, tied advice)

  • Best fit: Validators and Delegators, with more mainstream financial advice needs.
  • What is it: One on one advice, based on needs and evaluation of financial options from a reduced set of products.
  • Pricing: Varies, but often 0%-1% of investment upfront and around 1.5% of funds managed per year.
  • Providers: Specialist local advice firms, Bank tied agents and Insurance tied agents. 

4 key things to look out for in picking your financial advisor

Whatever type of advisor is right for you, there are some key things to look out for.

Are they competent?

Is the advice you are going to get any good. Although it’s by no means perfect, the best way to judge this is on their track record. For example, how have the funds they have invested current clients actually performed versus the market. What is the experience of the advisor and investment team.

Are they comprehensive?

If they are a multi, restricted or tied agency what range of options do they have available. Have they got access to a wide range of funds and how did they pick them? It might be that they are only restricted in products that aren’t relevant or that they have weak options where it matters to you. 

Are they compromised?

In the UK the FCA have banned the practice of speaking up commissions to advisors to incentivise them to push particular products. In Ireland this practice is still allowed, but commission information has to be shared with clients. Does the commission your advisor receive potentially sway their advice or does it align with your interests as a customer? 

Are they cheap?

Given the importance of getting good advice and its potential impact on your financial outcomes,  this is the least important of the 4 factors. However, if the advisor is competent, comprehensive and not compromised why not drive a hard bargain before signing up? Often advisors have some flexibility on the pricing they first propose to you.

How do moneysherpa rate financial advisors?

At moneysherpa, we weight the 4 criteria above. plus some additional ‘hygiene’ factors to come up with an overall recommendation score for each advisor in your area.

  • Competence: Based on past performance and advisor experience. (40%) 
  • Comprehensive: Based on access to the best funds and financial instruments. (30%)
  • Compromised: Based on the alignment between your interests and the advisor. (20%)
  • Cheap: Based on pricing data collected by the moneysherpa team. (10%)
  • Hygiene: Based on Authorisation, Indemnification, Complaints data and Qualifications.

To feature on our list of recommended advisors agents have to pass all of our ‘Hygiene’ tests and are then ranked out of 5 according to the weighting shown on the 4 C’s advisor rating criteria listed above.

Financial advisors, next steps

Whether you are a DIY’er, Validator or Delegator we hope this article helped you cut through the fog around financial advisors in Ireland and help you choose the right option for you.

Click here to go to our comparisons of financial advisors overall and by each investment type.

or choose your region below to find a recommended advisor near you.

Although there is no one size fits all solution, by presenting the facts and being transparent about the differences between providers we hope to make getting a great financial advisor a whole lot simpler.

We also have lots of other financial help, guides and resources. The sherpa’s 6 steps is a great place to start or our guides & tips area.

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mortgage broker cork
Angie O'Hara - mortgage sherpa lead

Need help with your mortgage?

No hassle, in a 15 minute call our mortgage sherpa team will guide you on the journey. 

They will help you borrow, find you the best deal and make the paperwork painless.

Best of all, they are free as they are paid for by the lenders.

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