How To Choose A Financial Adviser
Picking an IFA (independent financial advisor) is an important decision when it comes to your money as they will help you formulate a plan on how best to manage your money. It is therefore important that you find and IFA that you trust and you can be sure will be able to advise you effectively. When choosing an IFA, these are the five key questions you should ask.
1. What sort of adviser are you?
There are three major flavours of adviser. The IFA has to offer you products from across the whole of the market. This means they should be able to offer you the widest choice coupled with unbiased advice. However this means that a lot of in-depth or time consuming research may be required thus the fees may be fairly high.
Tied advisers only sell products from one company (ie they are ‘tied’ to the company). A good example of these would be financial advice given by your local bank or building society. Although tied advisers are bound by the same rules as IFAs ie they can only sell you a policy that suits your needs, they will only offer you the best products in their range and this may not be the best product available in the market.
Multi-tied advisers, as the name suggests, will offer products from a limited range of financial companies and are often a good compromise between an IFA and a tied-adviser.
2. How Much?
There are always costs associated with financial advice. There are two different ways of paying – a per-hour fee or via a commission. Regulations state that IFAs have to offer a menu of charges allowing you to pay by fee, commission, or a combination of the two. You should always be quite clear on how your payment is structured and the adviser should make clear to you any commissions they will be paid.
3. Qualifications
What sort of qualifications does your financial adviser hold? All advisers should have a Certificate in Financial Planning at the very least however there are a whole host of exams and qualifications on specialist areas such as pensions, investments etc. For advisers who have passed at least three exams in specialist areas, they will qualify for the Advanced Financial Planning Certificate (AFPC). Top advisers will also have the Chartered Financial Planner title.
4. Specialties
If you are looking for advice on a specific area of finance, eg pensions or ethical investments, you might prefer to work with an adviser who specialises in this area alone. Conversely, if you have no idea what to do with your finances you may want someone who is a general adviser who can advise you on a range of financial products.
5. The Business
If you are planning for the long term, look at the adviser’s business. What happens if they leave? Are there other suitable people there who could advise you? How long has the firm been established and what are other people’s opinions of the firm? Are you on the same wavelength as your adviser and do you feel they understand your financial position and needs? If you don’t feel that you are ‘clicking’ with your adviser or you don’t feel happy with them for any reason, you can always change.
Category: Savings & Investments
Tags: IFA, Investments, Savings
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