From 2012 no independent financial advisers will receive a commission from products they sell. Is this good or bad news?

It’s not the first time the system of financial advice has been tinkered with – so perhaps it’s not surprising that many people are already completely baffled by the different types of financial adviser and how they’re paid. But the change that the Financial Services Authority plans to be introduced by the end of 2012 is a significant one and while it’s good news for you if you can afford to pay for financial advice, it’s likely to mean that some people who don’t need much financial advice will find it harder to get truly independent advice. So what could it mean for you?

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Deciding that you want professional help with your finances is one thing. Finding someone who’s up to the job is another.

I’ve been involved in personal finance for more years than I care to admit to (I started when I was very young!) and the question that keeps coming up is ‘how do I find a good financial adviser?’ Many of us may feel we’d like to get expert advice and help with our finances from time to time; but how do you track down someone who will have your best interests at heart and not their own? There’s no completely foolproof system, but here are some tips I’ve picked up.

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Financial advice isn’t free - ever. Even if you don’t physically hand over any money, the adviser will get paid.

If you get advice from a financial adviser (whether they are independent or not), you have to pay for it. The difference with independent financial advisers is that they have to give you the choice of paying by fee or commission (the commission is taken out of the premiums from the products you buy). If you go to someone who’s employed by an insurance company or bank to sell their products, or someone who’s tied to a limited number of companies, they will invariably take a commission.

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