Questions to ask before handing over a lump sum to invest

You've saved a meaningful sum. Maybe it came from a bonus, an inheritance, a business sale, or years of careful saving. Now someone—a financial adviser, a colleague, a relative—is sitting across from you asking for your trust and your money. Before you sign anything or transfer funds, you need to ask hard questions and listen carefully to how they answer. The difference between a clear, honest response and vague reassurance could cost you thousands over time.

What exactly will you do with this money, and why?

A competent adviser will walk you through their specific strategy, not hand you a glossy brochure and move on. Ask them to explain, in plain language, what they intend to buy or invest in, why they've chosen those particular vehicles, and how those choices match your situation.

A good answer sounds like: "Given your 10-year horizon and moderate risk tolerance, I'd put 60% into a diversified equity fund, 30% in bonds, and 10% in cash. Here's why: equities give you growth over a decade, bonds smooth volatility, and cash lets you handle emergencies." They might walk you through a sample portfolio or show you historical returns—not as a promise, but as a reference point.

An evasive answer sounds like: "Trust me, I know what works" or "I've got some amazing opportunities lined up" or diving straight into jargon without pausing to check you understand. Hesitation or defensiveness when you ask for specifics is a red flag.

How will you be paid, and is that the whole picture?

Don't rely on what they volunteer. Pin them down: Do they earn a flat fee, a percentage of your assets, or commission on products they sell? Are there hidden costs buried in the funds themselves (expense ratios, platform fees, transaction costs)? Do they get paid more if they steer you toward certain investments?

A straightforward answer: "I charge 1.2% of your assets under management annually, billed quarterly. That's my only income from you. The funds I recommend have an average expense ratio of 0.5%, which is competitive. Here's a breakdown." They hand you a fee schedule or document.

Dodgy answers: "It's very competitive" without naming a figure, "The costs are minimal" without specifics, or "Don't worry about fees—focus on returns." If they seem uncomfortable itemising every cost, walk away. You're entitled to know exactly what you're paying.

How do you measure whether this is working?

Ask them how you'll track progress. What's your benchmark—the standard you'll compare results against? How often will you meet or review? What happens if performance lags?

The stronger advisers have a clear answer: "We'll review your portfolio quarterly. I'll compare returns to a blended benchmark—something like 60% MSCI World Index, 40% local bonds—and we'll discuss any drift. If we're underperforming without good reason, we'll rebalance or discuss adjustments."

Weak replies: "I'll beat the market" (unrealistic and hard to verify), "We'll just review when you want to" (suggests no structure), or "Past performance is no guarantee of future results" repeated without a forward plan (true but unhelpful).

Red flags to listen for

They're vague about qualifications. They promise specific returns. They pressure you to decide today. They discourage you from asking questions or seeking a second opinion. They minimise the importance of your full financial picture (other debts, dependents, job stability). They can't explain a recommendation clearly, even after you've asked twice.

Before committing a substantial amount, verify they're registered with a regulator like the FSCA if they're giving advice on regulated products. Ask for references from existing clients you can contact. Request a written investment plan that spells out strategy, fees, and review terms. Getting these details in writing isn't paranoia—it's due diligence.

A reputable adviser expects these questions and answers them without evasion. Use Strove to find vetted advisers in your area, read reviews from others who've asked the hard questions, and compare how different advisers respond. The conversation you have before handing over your money shapes the relationship that comes after.