Guide to Finding Financial Advice
What type of adviser do you want?
There are various types of adviser and it is important that you understand the difference between them before choosing one. Your choice of adviser will be influenced by whether you want full independent advice, advice on the products of a limited range of companies , advice on the products of one company, you want to trade or invest without any advice, or you want information only.
- Independent financial advisers
IFAs are required to provide unbiased advice across the whole of the market. They are paid via commission by the companies whose products they sell, although a small, but growing, number of IFAs now offer fee-based advice. Some will offer a mixture of commission and fees by offsetting commission against fees.
IFAs are required to pass certain examinations to be called an IFA and have to be authorised by the FSA. Some IFAS obtain higher qualifications in order to be permitted to sell certain specialist products and transactions, such as equity release or to carry out pension transfers.
- Whole of market
These advisers offer advice across the whole of the market but do not offer fee-based advice. This means they are wholly remunerated by commission from the products they sell on behalf of providers, such as insurance companies and fund managers.
- Multi-tied agent
These advisers can sell the products of a limited range of companies (usually 4-6) and are remunerated via commission from these companies.
- Tied agents
A tied agent can only sell or advise you on the products of the company he or she works for, whether this is a bank, building society, insurance company or other authorised financial institution. They are usually paid a salary, but with a commission-based element.
- Information only
You can obtain very basic information from organisations such as Citizens Advice Bureaux. CAB advisers are not authorised to give advice.
What type of service do you want?
There is a whole range of services which advisers can give and it is worth thinking about this before choosing an adviser.
- Full advice and financial planning
For this you will normally require the services of an IFA who can advise you across the whole of the market and take a holistic view of your financial needs.
- Wealth and asset management
Some IFAs specialise in this field, but if you have a very large amount of money to invest, more personalised services are available from private banks, family offices and stockbroking firms specializing in wealth management.
- Execution only
If you know exactly what you want to buy or trade, you will want an 'execution only' service. If you just want to buy and sell shares, you may want an execution-only sharedealing service. If you want to buy an sell investment funds, you may want to deal via a discount house or fund supermarket
- Information only
Some IFAs are willing to hold a 'free' initial one hour meeting with potential clients to discuss your needs or to answer basic questions, although clearly, the hope is that you will become a customer. A few IFAs provide 'pro bono' advice via Citizens Advice Bureaux.