Choosing a financial adviser shouldn’t simply be about finding someone with experience or a strong reputation. There is a much more important question: how are the decisions that affect you actually made? If you’re considering working with a professional, understanding what sits behind their recommendations is essential. This is where independent financial advice can make an important difference — and one worth understanding before entering into a long-term relationship.
You don’t need to be an investment expert to identify whether an adviser may be tied to a particular institution or whether certain incentives could influence their recommendations. Often, you simply need to ask the right questions.
Independent financial advice: what should you check before making a decision?
Independence shouldn’t be taken for granted simply because it appears in a marketing presentation or comes up in conversation. It’s better to understand what it means in practice.
An adviser may work closely with a bank, insurer or another financial institution. In that case, the options presented to you may be linked to the products and services offered by that particular institution.
With independent financial advice, by contrast, the analysis starts with the client’s needs and can consider different alternatives available across the market.
To understand which model you’re dealing with, these seven questions can help.
1. Which financial institutions do you work with?
It’s probably the simplest question — and one of the most useful.
There is a significant difference between an adviser who has access to products from a single institution and one who can compare solutions from different providers.
That doesn’t mean working with a bank or insurer is necessarily a bad thing. What you need to understand is how much genuine freedom the professional has to choose between different alternatives.
You can ask directly:
“If you believe another institution offers a solution that is better suited to my circumstances, can you recommend it?”
The answer can tell you a great deal.
2. How are you paid for your services?
Talking about fees before starting an advisory relationship can feel uncomfortable, but it’s an entirely reasonable question.
Financial advisers can be paid for their services in different ways. Depending on the service model, there may also be commissions or other forms of remuneration associated with the products they recommend.
What matters most is that you understand who pays, why they pay and how this could influence the recommendations you receive.
Transparency on this point is fundamental to any relationship built on trust.
3. Do you receive any commission from the products you recommend to me?
This question takes the previous one a step further.
Imagine you have two alternatives that serve a similar purpose. If one generates higher remuneration for the intermediary, there is a potential conflict of interest that you should be aware of.
That doesn’t automatically mean the recommendation is unsuitable. But you have the right to know that the incentive exists and to consider it as part of the overall proposal.
An adviser who clearly explains how they are remunerated makes it easier for you to make better-informed decisions.
4. How many alternatives do you compare before making a recommendation?
A recommendation isn’t really a comparison if only one option is available.
Suppose you have €80,000 to invest and you’re presented with a single product. It may be a good solution. But how can you know if you haven’t seen the alternatives?
In an independent financial advice process, comparison should play an important role. Not necessarily because dozens of products need to be analysed, but because there should be a clear rationale for selecting the options that genuinely fit your circumstances.
The point isn’t to have as many alternatives as possible. It’s to be able to explain why one option has been chosen over another.
5. What happens if I don’t invest in any product?
This is a particularly revealing question.
An adviser should be able to tell you that, in certain circumstances, the best decision may be to wait, maintain an existing position or make no changes at all.
For example, if you have significant short-term liquidity needs, taking on additional risk simply because you have money available may not make sense.
Financial advice shouldn’t be about generating transactions. It should be about making decisions that are consistent with your objectives.
6. What are the drawbacks of the solution you’re recommending?
When someone presents an investment opportunity, they’ll usually explain what it could offer: potential returns, diversification, tax advantages or other features.
But there’s an equally important second part: what could go wrong?
Ask about the risks, costs, liquidity, investment horizon and the potential consequences of exiting earlier than planned.
A professional recommendation shouldn’t focus solely on the benefits. If an option has drawbacks, it’s better to understand them before you commit rather than discover them afterwards.
7. How will we know whether this recommendation is still suitable in a few years’ time?
Personal finances aren’t a static snapshot.
Today, you may have a certain level of income, a particular capacity to save and a specific objective. Five years from now, your circumstances could be completely different.
That’s why, when looking for independent financial advice, it’s also important to ask what happens after the initial recommendation.
Will there be ongoing monitoring? Will the portfolio be reviewed? Will changes in your objectives be taken into account? Will the investments you’ve made be reassessed to ensure they still make sense?
Good financial advice doesn’t end when an investment is made.
