Good financial advice is worth its weight in gold. Here we outline what financial advisers do and how to find the right one for you
We all need a helping hand from time to time, especially when it comes to managing our finances.
That’s why so many people seek professional advice when faced with life’s biggest financial decisions.
Financial advice may not be free, but the peace of mind it provides can be priceless; giving you the confidence that your financial future is taken of.
As financial advisers vary in type, you might be wondering how to find the right expert for you. We’ll seek to help with that in this article.
What does a financial adviser do?
In short, financial advisers take the time to learn about you and your personal financial goals and put together a personalised plan to help you reach them.
Common financial goals include:
- Retirement planning (pensions)
- Saving and investing
- Life insurance and health protection
- Estate (inheritance tax) planning
- Equity release
- Long-term care planning
What type of financial adviser do I need?
Financial advisers come in two main types: independent and restricted.
Independent advisers, otherwise known as IFAs, can recommend financial products from across the whole market.
Restricted advice, meanwhile, is a catch-all term for any adviser that is not independent. They might only recommend products from certain providers or can advise on products from the entire market but only in specific areas, such as retirement planning.
It’s important to add that independent and restricted advisers essentially do the same thing – provide expert advice to individuals and businesses on how they can reach their financial goals.
Both are authorised and regulated by the Financial Conduct Authority (FCA) to provide financial advice, and the minimum qualification criteria (Level 4 Diploma) applies to all financial advisers regardless of their status.
Many go beyond the minimum standard and achieve chartered financial planner status, whereas others achieve specialist qualifications in areas such as equity release.
Every adviser must disclose their status when you first meet with them. The FCA’s register will confirm whether an adviser is regulated and authorised.
What about digital advice?
Due to recent developments in technology, you no longer need to see a human being to get regulated financial advice.
Roughly a decade ago, robo-advice emerged. This is an automated online service that guides you towards investment products and services that are suitable for your personal financial goals.
As the advice is delivered by algorithms rather than a human being, the costs tend to be lower. But on the flip side, the service you receive is less comprehensive. In fact, what some robo-advisers provide is closer to guidance than advice.
For this reason, robo-advice can only really cater for those with simple saving and investing needs.
How will I pay for any advice I receive?
Before proceeding with any advice recommendations, it’s important to find out how much it will cost you.
Financial advisers collect fees in different ways. Some charge a fixed fee, others are paid by the hour, and others charge a percentage of the assets you invest.
If you would like to receive advice on an ongoing basis, to regularly check that your financial plan is on track, you can pay for this too. This is typically charged as a percentage of your total portfolio value and is paid directly from your investments.
For example, if your portfolio is worth £200,000 and your adviser charges 0.50% a year for ongoing advice, you will pay £1,000. If your portfolio value increases to £250,000, your ongoing advice charge will be £1,250.
In some cases, you will only pay a fee if you proceed with the advice, whereas some advisers will charge whether you take up their recommendations or not. It’s important to establish this with your adviser the first time you meet.
How can I find an adviser that’s right for me?
So, you’ve established that you need expert advice, but how do you find the right adviser for you?
A good place to start is by speaking to family and friends to find out whether they use a trusted financial adviser that they are happy to recommend. However, you should bear in mind that there’s no guarantee that they will be the right adviser for you. You should take your time to get to know any adviser before entrusting them with your financial future.
Another option to find an adviser is using an online matching service, such as Unbiased. Let’s explore how Unbiased works.
Why should I consider using Unbiased?
With Unbiased, finding your perfect financial adviser is easy.
All you need to do is head onto the platform, enter some personal details and outline the financial goal you want to achieve, and within minutes Unbiased will match you with a qualified and regulated financial adviser.
What’s more, the service is free to use, and your first meeting with a professional will also be free. If you like what you see and hear, and believe their fees and services represent good value, you can proceed with the advice. The adviser will examine your whole financial situation and give an unbiased assessment of your options and goals for the years to come.
You will find both independent and restricted advisers on the Unbiased platform, but those in the latter category must be able to go off-panel should you ask them to.
This means that they can offer you truly unbiased advice on all products available on the market. Unbiased checks the credentials of its 27,000+ advisers to save you time and provide reassurance that you are dealing with a trusted professional.
Do I need to choose an adviser local to me?
If you want face-to-face advice, then using an adviser that lives nearby makes sense. But many financial advisers now offer online meetings using technology such as Zoom and Teams, so the location has become less important. If you are happy to do everything digitally, then you are free to use any adviser in the country who offers online meetings.