How to choose a good financial adviser

How to choose a good financial adviser

Finding the right person to look after you and your portfolio is one of the most important financial decisions you'll make. The key is to choose someone you're comfortable building a long-term working relationship with, because a good adviser doesn't just set up your investments and walk away. They look after you and your money on an ongoing basis, year after year.

In this video, you'll learn the many ways a good financial adviser adds value beyond simply keeping an eye on how your investments are performing. One of the most important is rebalancing your portfolio to the appropriate asset allocation. Because different assets perform differently, your original weighting gradually drifts over time. Since equities tend to outperform bonds over the long term, a portfolio naturally becomes riskier if left untouched. To keep your risk under control, your adviser will periodically, perhaps once or twice a year, restore your portfolio's original balance.

You'll also learn how a good adviser helps ensure you aren't paying more than you need to, particularly in tax. By carefully allocating your assets between taxable and tax-advantaged accounts, and later showing you how to draw down your money tax-efficiently in retirement, an adviser can make a meaningful difference to what you actually keep.

The takeaway: life rarely turns out exactly as expected. Your circumstances and goals may well change over the years, and when they do, you'll be grateful to have a trusted adviser who can adjust your plan accordingly. Choosing the right one, someone you trust and can work with for the long term, is what makes all of that possible.

Chapters / Key points

• Why you should choose an adviser you can work with long term
• Why a good adviser looks after you on an ongoing basis
• How rebalancing keeps your portfolio on track
• Why a portfolio naturally becomes riskier over time
• How an adviser controls risk by restoring your balance
• How careful asset allocation reduces your tax bill
• How to draw down your money tax-efficiently in retirement
• Why a trusted adviser matters when your circumstances change

Transcript

How to choose a good financial adviser

When choosing an adviser, you need to find someone you're comfortable having a long-term working relationship with.

As well as keeping a close eye on how your investments are performing, there are several things a good adviser will do for you on an ongoing basis.

One of the most important of these is rebalancing your portfolio to the appropriate asset allocation. Because different assets perform differently, the initial weighting will drift over time.

As equities outperform bonds over the long term, a portfolio will generally become more risky. To control risk, perhaps once or twice a year, your adviser will restore the original balance of your portfolio.

They'll also have to ensure that you aren't paying more in tax than you need to, by carefully allocating assets between taxable and tax-advantaged accounts. Once you retire, your adviser will show you how to spend your money in a tax-efficient way.

And remember, life rarely turns out exactly as expected. Your circumstances and goals may well change over time, and if they do, you'll be grateful to have a trusted adviser to adjust your plan accordingly.