Finding the best financial advice
If you choose to seek independent financial advice, don't just go to the first IFA you stumble across in a telephone directory. It is crucial to take more control of the process right from the start, to be sure you end up with the right IFA for you. There are a number of factors you should consider when selecting an IFA.
Location: Is it important to have your IFA’s office near your home or your place of work?
Areas of Expertise: Some advisers focus on particular product areas, so take care to choose the right one for your specific needs. Some solicitors offer independent financial advice, as do stockbrokers and accountants, but you should realise that accountants, for instance, will probably be strongest on tax issues. If you know what sort of advice you require, then select an adviser who specialises in this area. If you want advice across a range of products, then select one who has strengths across the board.
Qualifications: You can select an IFA based on their advanced qualifications across a range of products or across a particular product area. Information on IFA qualifications is available for consumers on www.unbiased.co.uk/independent-financial-advice/ifa-qualifications/ which will help you with the selection process.
Online presence: Consider if it is important for you whether your IFA has a website or is able to communicate via email.
Philosophy: You may want to deal with an IFA who focuses on ethical investments.
Type of IFA: Would you prefer a male or female IFA? Many men as well as women feel more comfortable seeking money advice from a woman or vice versa, and you can select an IFA on this basis.
Recommendation: If a friend or relative has had a good experience with a particular adviser, that can often be a great route and be highly reassuring – but be aware that your financial circumstances and needs may be different from theirs. Alternatively, if an IFA that you know nothing about catches your eye, ask them to provide the details of customers who are happy to talk to you.
Just like any other product or service you buy, shopping around for advice is crucial. It is important for you to get on with your IFA, especially since you will need to share a certain amount of personal information with your adviser.
Eyeing up their qualifications
To improve your chances of finding an IFA who matches your requirements, and to be 100% confident that they have a high level of competence in the area you want advice on, it is important to consider an IFA’s qualifications.
Basic qualifications
Whether tied or independent, all financial advisers are required by their regulator, the FSA, to hold the Financial Planning Certificate or the Certificate in Financial Planning before they are allowed to provide financial advice. Advisers with these benchmark qualifications are also obliged to keep up with relevant financial developments throughout their career, but in addition many opt to take advanced qualifications.
Advanced qualifications
An ‘alphabet spaghetti’ list of initials after an adviser’s name does not necessarily mean that much in terms of their advanced training. Sometimes the letters do not even refer to specific qualifications, simply membership of a certain body, so it’s worth asking questions and doing a little homework.
There is a wealth of advanced or incremental qualifications that advisers can achieve, some covering broad financial knowledge and some focusing on particular product areas, which may be of relevance to your needs.
The most popular advanced qualifications for holistic financial advice are the Advanced Financial Planning Certificate (AFPC) now known as the Advanced Diploma in Financial Planning and becoming a Chartered or Certified Financial Planner (CFP) Licensee. Advanced qualifications in pensions include G60 and AF3 and for investments, G70, AF4 and the Investment Management Certificate (IMC). Specialist qualifications in mortgages include the Certificate in Mortgage Advice, and the Certificate in Mortgage Advice and Practice (CeMAP).
Of course, many extremely good and talented IFAs have become so because of their many years’ experience in the industry, not because they chose to obtain an advanced qualification. However, there is often a correlation between a good adviser and a commitment on their part to learn as much as possible about a particular subject and to put this knowledge to the test in exams.
More and more advisers find that having additional qualifications helps them stay ahead of money issues and their financial planning implications, as well as reassuring potential customers like you about their professionalism. Indeed, many awarding bodies insist that to keep those precious letters after their name, advisers must maintain records of continuous professional development (CPD).
Naturally you should look for other qualities in your IFA beyond being super-qualified in the financial areas you want to discuss. You don’t need to be best friends with your adviser, but it helps if you find them approachable, particularly if you hope to establish a long-term relationship. Experience can count for a great deal too, so it’s worth asking how long they have been in business.
Focus on what’s right for you
Are you happy to select and buy on your own... Buy direct without advice.
Do you want advice on financial planning but access to only a limited number of products or companies... Seek tied or multi-tied advice.
Do you want independent advice on financial planning generally and on all relevant products on the market... Seek independent financial advice.
Looking out for the pitfalls
When looking for advice on one category of product, be aware that an adviser may not be able to offer independent advice on every sector.
An organisation can offer different types of advice, such as ‘whole of market’ advice on mortgages, but may offer only tied advice on investment products.
If you go back to an IFA you have used before, double check that he or she is still an IFA and has not changed their status. Some IFA groups may have given up their independent status and switched to multi-tied arrangements. They should spell this out to you, but it is better to be sure by asking.
If you need to find out additional information about an IFA's authorisation, you can look at the FSA Central Register at www.fsa.gov.uk/register or phone 0845 606 1234.