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7 Questions to Ask any Financial Advisor in the UAE

When planning your financial future, it’s worth considering whether you need a financial advisor. Here at Sarwa, we have financial advisors on hand, ready to answer any questions you have. So here are 7 questions that you should always ask financial advisor in the UAE.

1. How do you approach asset allocation?

It’s important to understand what methods your advisor will use when constructing your investment portfolio. A key part of that is knowing how they are going to allocate your investments into different assets.

Diversification is a vital part of asset allocation and you can learn more about it here. Diversifying your investments allows you to minimize risk while maximizing rewards. So make sure that your advisor is going to diversify your assets.

Are you regulated?

Before you partner with an advisor, you must ensure that they are legally allowed to work as an advisor. Some advisors will claim they have a long list of qualifications. But most of those qualifications won’t make them a qualified financial advisor.

So be sure to check whether a potential advisor is regulated by official bodies in the UAE. These regulators ensure that the advisor will serve the best interests of their clients. If the advisor is not, it might be worth your while finding an advisor that is.

How do you get paid?

Advisors get paid in different ways. That’s not to say they’re doing anything wrong. But it pays to find an advisor who keeps it simple. This usually means being paid a flat fee, which is calculated as a percentage of the assets that they manage.

If an advisor asks to be paid commission for selling financial products, tread carefully. Also, if the fees are too high, there are lots of lower-cost solutions, such as robo-advisors. If your advisor seems too expensive, perhaps look for a cheaper option.

What are my all-in costs?

It’s vital that you fully understand what an advisor’s fees are and how they charge. Ask your advisor about hidden fees, their fee structure and whether there are any lock-ins that may cost you extra.

Fees can erode your savings. So be vigilant and get your advisor to set out exactly what their fees are and when you have to pay them. You can then decide whether they’re good value for money.

What happens if I leave the country?

Today, we all travel more than ever. Perhaps work sends us to the other side of the world? Maybe we just fancy a new change? With this in mind, it’s important to choose a financial advisor who is flexible and so allows your money to move with you. Hence, an advisor shouldn’t have lock-in periods and they should use a global platform.

For example, here at Sarwa, we work with Interactive Brokers (IB) who offer global coverage to our customers. They ensure that a customer’s portfolio can always be used whether they stay in the UAE or move elsewhere. Your financial advisor should be able to guarantee you the same.

How do you measure performance?

The best way to know whether an advisor is managing your money well is to use an investment benchmark. Your advisor should tell you what benchmark they’re going to be measured against.

Even if you don’t know about finance, you can compare your portfolio returns to a benchmark.

Most traditional investors use data from the ARC Private Client Indices which provide real performance numbers available to participating investment managers for their private client’s discretion. Your advisor should be managing your assets to match, if not beat, the benchmark. If this isn’t happening, ask why not. And if they can’t provide an answer, find a new advisor.

7. Do you invest only with low-cost index funds or ETFs?

A great way for advisors to keep your costs low is to use tracker funds, such as ETFs. These are low-cost investment funds that enable you to generate maximum returns with minimum costs. They’ve also been shown to have better returns than other financial products.

So check if your advisor will use them in your portfolio. Hopefully, they like to use them to generate strong returns for your portfolio.

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Of course, there are countless questions you could ask a potential advisor. Here at Sarwa, we have advisors ready to answer questions you have.

If you ask our advisors the questions above, the first thing you’ll learn is that our asset allocation is highly diversified, allowing you to choose a level of level you’re comfortable with. We then build a custom portfolio based on your financial goals.

You’d also learn that we are incorporated in the Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA), where we hold a full category 4 license. This means our team of advisors have a regulatory responsibility to do what’s in your interest. At Sarwa, we don’t get paid to sell funds. Our job is to help you meet your financial goals. We also don’t have any lock in periods, which means you only pay when you use the platform.

Costs are really important to us too. Our advisory fee is always around 0.5% to 0.85% per year. We keep our fees low because we choose low-cost ETFs, and only charge a small advisory fee on what you invest. This advisory fee is, roughly, a quarter of the industry average.

When it comes to benchmarks, our advisors have an answer for that too. We benchmark our performance versus traditional investors using data from the ARC Private Client Indices. These provide real performance numbers available to participating investment managers for their private client’s discretion. So you can always measure how your portfolio is doing.

Finally, every Sarwa portfolio has been structured with ETFs from well known investment management companies, including Vanguard and Blackrock. We pre-build our portfolios, picking ETFs that have low fees, high liquidity and strong historical performance.

So, unlike a lot of financial advisors, you can see how our approach to investment is global, diversified, regulated, low-cost, tracked against a host of benchmarks and we use ETFs in all portfolios. If you have any further questions, why not schedule a call to discuss any elements of your financial future with one of our advisors? We’d be delighted to help.

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