If you responded to the Friday Riddle…thanks.  The answer to the riddle, as you’re probably aware now is….Trust.  Which brings me on to a question.  Should you trust your financial adviser?

What’s hard earned and easily lost?

Let’s be clear about trust.  Trust is (and should be) hard earned.  When we work with clients it’s important for us to earn the trust of that client.  As a professional practice we try to do this by (among other things) being consistent and clear in all our communications, delivering on our promises and when issues occur dealing with them in an efficient and effective manor.

However unfortunately a few ‘bad apples’ have given UK retail financial services a bad name.  This means that consumer trust in financial advisers or planners is as low as it’s ever been.  Upcoming changes in the UK should help to slowly rebuild this consumer trust….but I believe professional financial advisers and planners need to do more.

The other key issue is that the relationship of trust isn’t a one off event.  It builds over time and is truly tested (in the world of the financial adviser) when times are tough, markets change and portfolio values decrease.

Trust in your financial adviser can be easily (and instantly) lost if the potential risks haven’t been explained from day one and your adviser doesn’t review your circumstances regularly.

However, you shouldn’t lose trust in your financial adviser in ‘bad times’.  It’s probable that if you are working with a financial adviser your goals will be long term and it’s likely there will be some bumps along the way.  As long as your adviser is consistently communicating with you and continues to communicate with you fairly, openly and honestly the relationship of trust should be maintained.  This approach is summed up beautifully by this quote from Corrie Ten Boom:-

"When a train goes through a tunnel and it gets dark, you don't throw away the ticket and jump off. You sit still and trust the engineer."

However this doesn’t solve the problem if you are looking for a new financial adviser to work with.  After all, how can be sure you choose an individual who is right for you?  How do you choose an adviser who is worthy of your trust?

The answer to that is preparation, research and knowledge.  Before you select a new adviser ensure that you do enough research, you prepare for the meeting by ensuring you know what questions to ask and you are equipped with enough knowledge so that you can test the advisers technical expertise.  Luckily we now live in a world where we can do many of these things at the touch of a button.

In addition to this it’s important to ensure that your adviser understands your hopes, dreams, aspirations and needs after you meet.

So, let’s go back to the original question.  Should you trust your financial adviser?  The answer is yes….but not before asking a number of important questions, including:-

Does he (or she) communicate fairly and consistently in good times and bad?  

Have you spent the time to conduct your own research and ensure you are equipped to make a decision on that adviser?

Have you enough financial knowledge to broadly test the financial advisers technical expertise?

Does your adviser take the time to understand your hopes, ambitions and plans for the future?

By asking these questions (in addition to any additional questions you may want to ask!) you should now be more equipped to answer the question – “Can I (or should I) trust my Financial adviser?”