Get the right steer by avoiding the cowboys
1. There are different types of adviser and they can also be called financial planners or brokers. Generally they are classified by their area of expertise so work out what you need advice on first. Is it a pension, a mortgage or a general overhaul?
2. Now search online or look at adverts in the financial news pages for a specialist in the required area. Or check what’s available through your workplace, there might be free advice. Don’t just phone a friend – your brother-in-law’s mate from the gym might not be as qualified as you think.
3. Financial advisers can either be independent (able to sell you products from any firm) or restricted to advising on a small range only. Ideally you should pick an adviser who offers the widest selection.
4. You will have to pay. Advisers working with investments, pensions and general planning charge a separate fee. Mortgage and insurance brokers are paid by commission which is rolled into the deal you sign up to and can be harder to understand.
5. How much does advice cost? The average fee is about £150 an hour but it can vary. You could also pay a set price of hundreds or even thousands of pounds for a single piece of work. Another option is an ongoing flat fee, perhaps monthly, or a fixed percentage deducted from your investment.
6. Before signing up, check your adviser is qualified. Ask to see the proof. They must have completed financial exams to the equivalent of QCF Level 4 and preferably beyond - there are certain qualifications for some areas of specialisation.
7. Finally, ensure the adviser is regulated by looking up the company on the register at the Financial Conduct Authority (FCA) website here. This becomes even more important if things go wrong: see point 9 below.
8. Consider what to discuss before you meet the adviser. If you have financial products already, take along the paperwork. Make sure you understand the issues: take notes if necessary. You don’t have to sign up on the spot and can see several advisers before making a choice. There’s a good list of questions to ask a potential adviser at the FCA website here.
9. There is comeback if you lose money as a result of bad advice (not just because the stock market has fallen taking your investments with them). You can approach the Financial Ombudsman and the Financial Services Compensation Scheme. But your adviser must have been approved by the regulator - the FCA - for this to happen. See point 7 above.
10. Even those who work in financial services don’t always understand every little detail of their mortgage agreement. Taking advice is important. It may seem expensive in the short term but remember that making the wrong decisions now - about retirement savings especially - could seriously impact your life choices in future years.
- Find financial advisers at www.unbiased.co.uk or at the Personal Finance Society here.
- Customers rate financial advisers at www.vouchedfor.co.uk based on their own experience.
- The Financial Ombudsman is here and details of the FSCS compensation scheme can be found here.
Last updated 28 May 2018.