How to find a financial adviser
The internet is flooded with financial advice, but finding sound independent advice on your money is more difficult. Moneywise TV shows you what to consider when choosing a financial adviser.
Knowing how to manage your money in the most effective way possible can be a challenging task, and that’s where financial advisers come in handy. But with tens of options available online, how do you pick the one that is right for you?
The first step, before consulting any adviser, is to understand how the industry works. At present, advisers fall into three categories – independent, tied and multi-tied.
Independent means that they are completely impartial, and can give advice on any product available on the market. Tied means that the adviser is tied to a bank and can only advise on its products, whereas multi-tied means they are a little freer, but still can only advise on limited products. For the best advice, an independent financial adviser is the gold standard.
Also, advisers can be paid either by a fee-based system, or by commission from the products sold. The fee will either be on an hourly basis or a flat-rate fee per appointment.
The industry is about to change, however. From the start of 2013, financial advisers will be regulated more carefully, and the different terms will be replaced by ‘independent’ and ‘restricted’, and they will only be able to earn money through client fees, which stops them selling you a product based on commission.
When you have familiarised yourself with the industry, be clear about the advice you are looking for. An adviser will be able to help you more effectively if you know what you hope to gain from the meeting. Are you looking for a mortgage? Or perhaps a fund to invest in? Make sure that whatever advice you’re looking for, the adviser can offer you.
Once you know what areas of your finances you would like help with, use search engines such as unbiased.co.uk and moneywise.co.uk/find-an-ifa to find an independent financial adviser (IFA) in your area. Within these, you can search for advisers based on specialisms, gender, qualifications and location. Ask around your family and friends for advice, they may have sought help in the past and be able to recommend somebody in the local area.
The next thing to consider is if they are regulated by the Financial Services Authority (FSA). They should carry an FSA regulation number. Also available through the FSA is a list of unauthorised advisers, so check that the adviser is not on this list.
Then when you choose an IFA, speak to them first to find out about their specialism and qualifications, and if they can offer you the right advice. Also ensure that you trust them. They will be working closely with your finances, and it’s important that you get along!
If you do have a bad experience, you should complain to the adviser in writing first. If you don’t have any luck through that, you can take your case to the Financial Ombudsman.