If you want to invest money profitably or take out insurance, you often rely on valuable tips from professionals. What to consider when looking for a financial or insurance advisor.
It’s not easy, finding a good financial advisor or a top insurance advisor. Of course, he or she should be technically competent, have a few years of experience, work transparently, be able to demonstrate certain qualifications and actually give independent advice and not just “sell” according to their own interests, says Thomas Mai from the Bremen consumer advice center.
Every consultant uses such qualities to advertise themselves. But how can I find out whether this is true – and how do I find the right expert for me? Five points that matter.
Point 1: What do I actually want?
When it comes to far-reaching financial decisions or essential insurance issues, you should attach great importance to neutral and independent advice and product selection – as free as possible from conflicts of interest or provider loyalty.
“Here, when it comes to pension issues or protection against occupational disability, consultants who are not allowed to take brokerage or commissions from the provider side would be more suitable,” says consumer advocate Mai.
According to the Bremen consumer advice center, insurance brokers are also an option when it comes to insurance issues such as liability, household goods or residential building policies. Although they receive brokerage fees from the product provider, they could make an independent and better product selection than, for example, pure insurance agents.
However, if you want to invest a large amount of money, Thomas Mai believes that the insurance agent may be wrong, since investing in investment funds or ETFs is more suitable for building up assets than perhaps putting the money in expensive insurance.
That means: The more important and extensive the matter is and the less I know my way around, the more important it is to get a second or neutral opinion and ask more critical questions. “Because there is no such thing as one good advisor for all questions,” says Thomas Mai.
Point 2: Pay attention to designations when searching
If independent advice is desired when looking for a consultant in the financial sector, one should look out for the designation “honorary investment adviser” or “honorary financial investment adviser”. These titles are protected – in contrast to “honorary advisor”, “financial advisor” or “asset advisor”.
The independent consultants must have a permit in accordance with Section 34h of the Industrial Code (GewO) or Section 94 of the Securities Trading Act (WpHG) to practice as a consultant and refer to this in the imprint on their own homepage.
Even before the first contact, those seeking advice should play it safe and find out what permission the advisor has. You can check the information on the intermediary register of the Chamber of Industry and Commerce.
Independent consultants can be found via search engines on the Internet or via professional associations.
Point 3: Check qualifications
Find out what qualifications the advisor has. “The minimum is that he or she can show proof of training in the commercial field,” says Elgin Gorissen-van Hoek, a Munich-based financial investment advisor. Alternatively, a degree in economics and finance and further training in the field of financial planning would be desirable. “Have confirmation in an initial meeting that there are no payments from third parties, i.e. no commissions,” advises Gorissen-van Hoek.
Point 4: Build a trusting relationship
If the chemistry between the two sides is right, it’s about building a trusting relationship. Make sure the advice is about your goals, not primarily about products. Ideally, those seeking advice are shown several options for a specific goal and the respective costs are explained in detail – “and in a comparable form,” explains Gorissen-van Hoek.
When it comes to financial products, customers should find out to what extent the advisor knows about sustainable products that avoid nuclear energy or coal-fired power generation, says Gorissen-van Hoek. For example, a question might be: “Can you show me what the funds do with the money that I may put in there?”
Also important: the customer must understand the product being presented, otherwise you should keep your hands off it. In addition, the most important points of the written information on the individual products should be explained so that you can read everything again at your leisure at home and discuss it with relatives or friends. In the case of funds and ETFs, the following must be handed over to the customer: the basic information sheet, the sales prospectus, the annual report and the semi-annual report.
For a second opinion, for example, another advisor or a consumer advice center can be the right place to go.
Point 5: Beware of time pressure on the part of the consultant
“If the consultant puts a customer under time pressure, this is clearly dubious,” says Gorissen-van Hoek. Customers should then seek advice elsewhere.
However, if both sides agree, it is necessary to conclude a contract. This contract should be drafted in a generally understandable way. It can be revoked within two weeks if the customer has any doubts after signing.
