Questions to ask before hiring a financial advisor!

04/01/2025
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Posted by: Filippo Stipo

One of the most important aspect in the life of a successful person is making the right decision. And one of the most important decision is hiring the right financial advisor to manage your wealth towards your financial objectives. Yet most important if you are an expatriates living in Asia, where you need to take into consideration many dynamics compare to living in your own country (currency, tax, international transfers, etc…).

First of all, when you are in front of a candidate to become the person who will manage the your hard-earned savings, you need immediately to feel some kind of safety. This is a most instinctive and subjective feeling that everyone need to evaluate by himself.

Instead, there are some easy questions that you can ask to better understand if you are in front of a trusty financial advisor:

What is your background?

This questions regards either the educational background that the professional background. Obviously an education in finance or economics is already a well reiceved news. If the advisor come from other fields, ask in more details his professional path asking about some specific qualification. Once, you understood his background you can go through a deeper analysis, introducing a hyped topics of some recent financial news and see how he handle the argumentation.

Are you personally regulated from some financial authority?

Most of the financial advisors working in Asia are not personally regulated from any financial regulator. They work under the company regulation obtained in country such as Malaysia, Seychelles, Dubai, etc… In Europe, UK and in USA, every financial advisor needs to get a regulation by a government entity like the SEC in US or the local regulator in the European countries (Consob in Italy, FCA in UK, AMF, in France, etc…). If you don’t have an authority oversighting how the advisor sell, how much he will payed, what financial vehicles uses, maybe some of them are tempted to sell some products more convenient to them than to the client without any fear to lose the license (because they don’t have one).

Are you independent or you work for some institution?

Most of the advisors always say that they are independent, even if they use a third layer company that impact the cost of your investment. If between the advisor and the platform he uses to invest your money there is another company, the meaning is that the cost for the client rise, the customer service is slower, and the independence on the advisor’s decision is not total.

How much is the cost of the service?

The most part of the people that already invest with a bank or other channels, don’t have an answer to that question. Actually, this is one of the most important point to determine the performance of your investment. I heard about people that pay an annual fee of 3%(sometimes even more) on the amount of their investment and maybe they have a portfolio that historically earned around 6%. That means that you will earn around 3% per year and then there is no meaning to have a financial advisor, you just need to buy a 10 years government bond that yields 3,5% with very few risks. An average management fee is around 1 to 1.5% according to the amount the client invests.

When will you be paid?

Most of the advisors selling investments wrapped in insurance products are being payed immediately when the customer sign the contract. What do you think would be the interest of your advisor in the long term to care about your portfolio? Ask to your advisor when he will receive the fees and with what frequency to be sure that he keep attention to your portfolio.

Author: Filippo Stipo