Your checklist for selecting a financial adviser
The financial services industry in the UAE has its own set of reputation issues. (File photo)
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It’s a common occurrence: whenever I attend a dinner party or social function and introduced as working closely with the financial services community, the inevitable question follows - “which financial adviser would you recommend?”.
I’m not surprised by the question and it demonstrates how cautious consumers have become when trusting others to give non-biased or self-benefitting advice. And who can blame them, the world news has been full of the immoral behaviours of bankers and financial services people since 2008. There doesn’t appear to be a very long gap between one financial scandal dying down and the next one emerging. Consumer trust in the financial services industry is at an all-time low.
The financial services industry in the UAE has its own set of reputation issues. I’m sure most people have been called at some point by a financial adviser offering their services and expert advice on how to invest your hard earned money. Maybe I’m out of touch, but I’m still surprised by how successful these companies have become using this method of acquiring new customers, even though “cold calling” is against the rules of the Central Bank of the UAE. Don’t you wonder where they get our numbers from?
The main problem here is from the first point of contact there is a sales pitch, a script and a well-rehearsed methodology to win your business. It doesn’t happen by accident - these businesses have years of experience in getting potential clients to make an appointment with an “adviser”. We all know we should make more, better and successful financial, planning and investments decisions, so an “expert” offering their advice and help, in the comfort of your own home, under no obligation appears an attractive offer. If they appear professional and the solutions appear attractive then why wouldn’t you proceed?
The issue for me is the term “professional”. It is used liberally in many different contexts, but what does this actually mean?
The organisation I work for, a professional body based in the City of London, defines professionalism as the combination of three key elements. Knowledge – how deep is the adviser’s understanding of the financial services markets and industry? Skills – how do they continuously update and further develop that knowledge, and apply it in their service to clients? Behaviour – do they have integrity and behave ethically, adhering to the standards expected of them?
All three elements combined have to apply when advising and dealing with customers as any two together solely could potentially be dangerous.
So when people ask me who I’d recommend using for their financial needs, my answer is clear: check the credentials of the adviser in question. Asking a few simple questions will give people the peace of mind that they are indeed dealing with a qualified professional who has their best interest at heart.
Here is my four-point check list that I recommend going over before selecting a financial adviser:-
1. Are they professionally qualified? – I wouldn’t trust a doctor with my health if they hadn’t taken professional exams or qualifications. Similarly, I wouldn’t trust a financial adviser with my financial health if they are not qualified to do so.
2. Are they experienced? – How long have they been operating within the financial services industry? There is a large number of advisers here in the UAE who have no prior knowledge or involvement in financial services prior to moving to Dubai to “live the dream”. Experience counts, several years at least before they are able to advise customers effectively.
3. Do they belong to a professional body? – Professional bodies such as the one I work for exist to raise professional standards for the benefit of the consumer. We have codes of conduct, integrity and ethics committees, set professional exams and expect the highest level of standards by our members. They are expected to prove how they have kept their knowledge up to date and they are entirely voluntary to join, but have high entry requirements. Individuals who join are making a commitment to maintain these high standards, which provides added credibility to the trustworthiness of an individual.
4. How did you hear about them? – Personal referral is the best method to choose your adviser. Someone you know who is a client and happy with the service and advice they have been given. Be careful, however, because often advisers will ask new clients to refer friends and acquaintances for them to contact. This would normally be at a stage of any transaction or investment when it’s too early for you to accurately access the advice you have been given. Good advisers don’t need to ask for referrals, they are given them automatically.
By Matthew Cowan