It doesn’t matter whether you’re just starting out on your savings and investing journey or you’re easing into retirement – there’s always a place for professional financial advice.
You may be happy managing your own money and running your own DIY investment portfolio, but life is paved with milestones at which a helping hand can make a real difference. Financial advice isn’t just about investing – it can help you with any element of your finances, including getting a mortgage, building a pension, working towards retirement goals or sorting out your estate.
An adviser can really come into their own at certain life events and when it comes to more complex financial issues. But how do you find one, and what does a good adviser look like?
What kind of adviser do you need?
Firstly, ask yourself which kind of financial adviser you need. Do you need general advice, such as help with investing, mortgages, tax and general financial planning? Or do you need more specialist help, like a dedicated pensions adviser or someone who offers advice on equity release?
Once you identify the kind of help you really need, think about whether you’d prefer a small, local adviser or a larger national firm. There’s no real differences between the two options – much will depend on the chemistry you have with the actual adviser you end up with, as they may be someone you end up working with for many years to come. If you get on well with them and trust them to represent your best interests, they have a much better chance at delivering the results you want from them.
Types of advisers
Financial advice firms fall into two broad categories: independent and restricted. A fully independent firm can offer completed unbiased advice on all areas of the market, whereas a restricted firm may have certain limitations. These can include specialising in one area (such as retirement) or offering advice on all areas but only offering certain types of products or from a limited range of providers.
These days there’s also digital investment services, which offer a low-cost, automated version of advice but not the tailored advice that a traditional human advice service provides. You can read more about digital investment services here.
The main qualifications to look out for
There’s a wide range of qualifications from a number of professional bodies. The very least an adviser should have to their name is a Level 4 diploma, which meets the Financial Conduct Authority’s (FCA’s) minimum standards. They must also have an up-to-date Statement of Professional Standing (SPS), which tells you that they’ve completed their annual continuing professional development (CPD) in line with FCA requirements and have signed up to its code of ethics.
But many will have a number of additional levels of qualification, particularly if they specialise in a particular area. The best qualified are known as ‘chartered planners’ or ‘certified planners’. Don’t be afraid to ask your adviser for details about the qualifications they have. You want to be sure you’ve got a well-qualified adviser before trusting them with your money.
Costs and charges
There’s no one-size-fits-all approach when it comes to fees, so it’s worth asking an adviser how much you can expect to pay. A financial adviser must tell you how much they charge before they take you on as a client.
While some may charge by the hour, others might charge a fixed fee for a percentage of your pension pot, for example (usually between 1% and 2% of the value of the asset). You might not be given an exact amount that you’ll pay, but you should be given a good estimate. As a very rough guide, you could expect to pay around £200 an hour.
Their offering
Advice services can vary significantly, both in terms of what they can do for you and how they go about it. Typically, advisers will give you a written financial plan or report with an overview of your current situation, as well as recommendations to help you reach your targets. Services could include arranging mortgages, investment planning, pension planning and estate planning. If you require advice in a particular area, check the adviser is able to provide the service you need.
Their communication style
Firms often have quite different ways of working, especially when it comes to how often they contact you and the extent to which they keep you informed. The more traditional firms tend to manage everything for you, with relatively little communication between meetings, whereas other firms will give you the option of being more engaged in the process, through technology such as client portals.
This is another reason why it’s worth drawing up a shortlist and having a chat with two, three or four firms, so you can ensure their approach is in line with your preferences, needs and values. Many will offer a first consultation for free. If you want to be kept involved and up-to-date, find out how a firm will go about that, and ask any questions you have about how often you’d meet them and their availability in the event of you wanting to contact them.
Where can I find a financial adviser?
Helpfully, online services such as Unbiased and VouchedFor offer searchable databases of qualified financial advisers. They allow you to tailor your search by region, or by the type of advice you require – such as someone well qualified in investing and pensions, tax, or mortgages.
Once you’ve identified some advisers to contact, run a quick check on the Financial Conduct Authority’s register, where you can make sure an adviser is properly authorised.
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