How to choose the right financial advisor

Choosing a good financial adviser is one of the most important things you can do when it comes to organising your money and your future. Personal finance is a specialism, and it’s not uncommon for people to feel a bit ‘lost’ even at the initial stage of approaching someone for advice. Finding someone with whom you are comfortable and who suits you and your needs, will set you up for life.

There are two types of financial adviser to be aware of: independent and restricted.

If a firm gives independent advice, it must consider a broader range of products. A firm giving independent advice will need to provide unbiased, unrestricted advice based on a comprehensive and fair analysis of the relevant market. These requirements are designed to ensure that independent advice is free from any restrictions that could affect the ability to recommend whatever is best for the customer.

A firm that is not independent is labeled as restricted which might, for example, entail advising on just a limited range of products or providers.

Independence:

An Independent Financial Adviser (IFA) is able to select the most appropriate solutions and products which most accurately address the needs of the individual client. Independence also equates to freedom to adapt swiftly with market developments or changes in legislation. A genuinely independent financial adviser will be authorised and regulated by the Financial Conduct Authority (FCA), which should be indicated on business cards and other stationery. Be sure to establish your potential IFA’s independence from the outset.

Qualifications and experience:

Anyone who gives financial advice must have a Certificate in Financial Planning as well as a Diploma in Financial Advice (DipFA) which indicates that the holder is someone with proven analytical understanding of the services and products of the financial marketplace. Experience counts for an awful lot too, so don’t be afraid to ask any potential IFA about their background and track record in the industry.

Fees – transparency and choice:

Any initial consultation with an IFA should be free and the meeting should cover the options for payment of any subsequent services. Make sure your potential IFA explains your options clearly and comprehensively so that you can make a free and informed choice.

Personalised, quality advice:

A good IFA will research individually for each new client, not rely on generic financial planning models. Always ask how your IFA conducts client research and beware of anyone who does not need to know your personal circumstances and plans for the future. Understanding a client’s lifestyle, goals and motivations is key to achieving financial goals. Financial products and personal circumstances can change, and your IFA should offer accessibility and regularity of contact as well as monitoring your account on your behalf.

Communication and comfort:

Approach any potential IFA with a long-term relationship in mind. If you feel comfortable and confident from the outset, you are far more likely to achieve your financial objectives. Ask yourself if you feel fully informed, if your IFA is good at explaining things and whether or not you are happy to share personal information which may have a bearing on your finances.

As complex and evolving as the financial market is, choosing the right IFA should not be complicated. Do not be frightened to ask questions it is your money that this relationship is based on. You should feel informed, inspired and comfortable after your initial consultation; and ready to embark on a long-term relationship based on mutual trust and transparency.