One question that I get asked most frequently is ‘how do I find a good financial adviser?’ There’s no completely foolproof system, but here are some tips I’ve picked up along the way.
Draw up a job spec for your adviser
Treat your search for an adviser as though you were recruiting a colleague for a job. Work out what you want and draw up a job spec.
– Interview several advisers before you choose. Talk to at least three different advisers. You might find the idea a bit daunting if you feel mildly queasy when faced with financial jargon. But if the adviser can’t explain what they do in language you understand, they’re no good at their job.
– Ask how you can pay. All financial advisers (whether they are independent financial advisers or restricted advisers) who deal with investment products and pensions have to charge you for advice. However, there are different ways that you can pay an adviser (for example, an hourly fee, a fixed fee or a percentage of the money you’ve asked them to invest).
SAVVY TIP: If a financial adviser is advising you about some types of insurance, they can be paid a commission by the company whose products they recommend.
– Ask about their qualifications. All financial advisers have to pass a minimum level exam, but I’d recommend looking for more. You can read more about understanding financial adviser qualifications and what they mean elsewhere in this section.
SAVVY TIP: Chartered financial planners have to pass more exams than other advisers (so their technical knowledge is very good) and certified financial planners have to pass advanced exams and show they understand ‘holistic’ financial planning and have ongoing testing. They are widely regarded as having the most knowledge of all financial advisers.
– Ask what you can expect for your money. Saran Allott-Davey, a chartered and certified financial planner with Heron House Financial Management gives this advice: “We’d normally want to know we could add as much value as the fee we’d charge. If we can’t, we’d say so.”
– Find out whether you can get a free initial consultation. Not all advisers do this, but many will give you 30 minutes of their time without charging.
SAVVY TIP: After your 30-minute consultation, the adviser should be able to give you an idea of how much advice should cost (or an hourly rate and an estimate of the time involved).
– Ask for client testimonials. There’s always a danger that the adviser will produce testimonials from a couple of friends and a family member, but if you speak to them direct (rather than reading a letter or email on file) you should be able to get a feel for what they like about the adviser.
Where to find financial advisers
There are several different websites where you can find independent financial advisers.
– Unbiased.co.uk: this lists thousands of IFAs and lets you search by postcode, area you need advice on, how you’d like to pay and additional qualifications.
– Institute of Financial Planning; you can search for a certified financial planner. These are specialist financial planners who have undergone more exams than other financial advisers and work in a ‘holistic’ way.
– Findanadviser.org: all financial advisers listed are members of the Personal Finance Society who have signed up to a code of ethics. Some will also be chartered financial planners.
Vouchedfor: This is a recommendation site where you can rank advisers by their rating.
– Ask for a recommendation. It’s always worth asking for a personal recommendation from friends or family.
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