For many, using a financial adviser is a move that feels like it belongs in the same category as hiring a personal shopper, or paying for private chef: Nice, but an unnecessary luxury that generally falls within the reach of the wealthy.
But while financial planning may have a reputation as a service used mostly by those who already have money, it is not as exclusive or inaccessible as it seems. In recent years, the profession has undergone a transformation to bring itself more in touch with people from a wider variety of ages and backgrounds.
For someone about to venture into unfamiliar territory, like marriage, parenthood, buying a home, starting a business or considering retirement, having a professional to guide you can make the transition feel significantly less daunting.
Types of financial advice
Financial advisers offer services ranging from general financial planning and investment advice, to more specialist advice, such as that around pensions or inheritance tax planning.
In the case of investment products, some advisers are ‘independent’ – meaning they offer advice on the full range of investment products from the market or a specific market segment (e.g. pensions), while others offer a ‘restricted’ service meaning that the range of products or providers they will look at is limited, for example mortgage advisers in high street banks.
Choosing an adviser
First of all, ask around for a recommendation. Speak to family and friends and find out if they have used a financial adviser in your local area. Of course, just because they have had a good (or bad) experience with them, it does not mean you will have the same experience, but it is certainly a good starting point.
If this fails, you can turn to the internet or review sites like Feefo. Try to shop around a little bit. Financial adviser’s fees will vary so you need to make sure you understand all the costs involved and compare the charges between different advisers before you make a final decision. It is a big deal to trust someone with your financial future, so you want to make sure you have chosen the right person for the job.
The following resources can help you find the best adviser for you. It is best to draw up a shortlist of at least three financial advisers and make contact with them all before deciding on one.
The Financial Conduct Authority (FCA) register – the FCA’s register lets you check whether your adviser is properly authorised.
Personal Finance Society (PFS) – a searchable directory of PFS members, who could hold certifications including Chartered Financial Planner.
What should I look for?
1. Figure out what type of advice you nee
If you need retirement advice, it might be best to go for an adviser who specialises in pensions. If you need a complete financial plan, go for an adviser who offers the whole package rather than just focusing on, say, investment advice.
2. Check their qualifications
Although the Retail Distribution Review (RDR) legislation requires that all advisers are qualified to a certain level, it’s worth checking that they actually are. Look out for extra qualifications too, as that will show they’ve gone the extra mile.
3. Discuss fees and charges
Find out more about a firm’s service proposition and what is included in the fee you pay.
4. Get it in writing
Ask for a hard copy of the adviser’s recommendations in case anything goes wrong. Most advisers will issue a suitability report to outline their recommendations. If you don’t understand something, ask the adviser to explain it.
5. Make sure it’s a personalised service
Be sure you are not receiving generic advice that could apply to anyone – ask questions about the suitability of the recommended products with your situation and your attitude to risk.
6. Make sure you can forge a relationship with your adviser
You are trusting this person with one of the most important things in your life – your financial wellbeing – so they need to be right for you.
What if things go wrong?
Financial advisers are regulated by the Financial Conduct Authority (FCA), and this gives you access to redress should anything go wrong with your advice through the Financial Ombudsman Service (FOS).
This means you can complain to the FOS if you are unhappy with any advice you have been given or if you think you have been mis-sold, and the FOS will take the appropriate action – for example, ordering your adviser to pay compensation.
The FCA has the power to fine financial advisers who have broken regulations. Remember, when it comes to investments, you’re not covered if your investments lose you money – that comes as part and parcel of putting your money on the stock market.
Yes, taking financial advice is going to cost you. But when it comes to making life-changing financial decisions, it might save you money in the long run. If you are interested in speaking with an adviser or would like to arrange a free initial consultation, please call the office on 01423 223640.