Did you know people who use an IFA earn on average 3% more per year than their unadvised counterparts? This might not seem a lot, but based on the average UK pension that would mean an extra £144,000 in your pension pot!
I’ve discovered that this value add is less about a financial advisor picking the best investments, and more about their skills at avoiding costly mistakes like selling at the wrong time, paying too much tax, or even investing outside of your risk profile.
Getting the right advice could result in even non-affluent savers almost £48,000 better-off over the course of 10 years. Even people who are classified as ‘just getting by’ stand to gain a 24% boost to their pension pot over the course of a decade after getting financial advice. That’s the equivalent of £35,054 in your pension – not a sum to be sniffed at!
With this in mind, I’ve set out to help you find the right level of advice to complement your finances, which is why, within this guide, I have taken the time to outline how to find a financial adviser, the questions you should be asking before engaging their financial services, and the cost you can expect to incur.
How to Find a Financial Adviser – 7 Steps
By using our postcode search tool above, you can find a list of reputable financial advisors in your area. However, finding the best adviser for your unique circumstances requires more consideration than simply picking a name from a list. Below I have listed five steps to take in order to find the best financial adviser for your circumstances:
1. Identify if you actually need financial advice
Simple financial transactions such as saving for your retirement, building your savings, and paying off your mortgage can often be achieved without incurring the cost associated with financial advice. However, individuals with more substantial savings and investments, and those experiencing potentially life-changing events such as an inheritance or the birth of a child, can often benefit from the expertise of financial advice.
2. Identify the level of service you require
Often financial advisers will be keen to lock clients into an ongoing service, however, this isn’t always suited to your circumstances and identifying what could be a one-off issue could help save you ongoing charges. Another way to avoid being overcharged for the level of service you require is to ascertain whether you require face to face advice with a local adviser, or whether remote advice will suffice. The latter can work out cheaper, especially if you are seeking advice in an affluent location such as London.
3. Do you require independent financial advice?
There is a difference in price between restricted advice and independent advice, the latter presenting a greater upfront cost. Restricted advisers will often recommend their own products or those from a limited number of providers which could end up matching you with a product that could cost you more in the long run, whereas independent advisers can access products from across the entire market.
4. Choose which areas of your finances could benefit from advice
I mentioned in my introduction that successful financial advice requires more than just picking the right investments and a more holistic approach will set you on the path to success. That being said, keeping costs down is a consideration so you don’t want to pay for services you don’t need. Long-term and potentially life changing events such as planning your retirement, or managing an inheritance can often benefit from financial advice, however, if you are simply saving into a SIPP or opening a stocks and shares ISA, you could potentially save yourself the cost of advice.
5. Understand the costs
In my experience getting the charges laid out from the outset can have a massive effect on your ongoing relationship with your adviser. Therefore I have gone into how advisers charge for their time and what you should be aware of in greater detail below.
6. Seek recommendations from family and friends
The experience of friends and family can provide you with an invaluable insight as to the practices of the advisor they have used. Whilst this can be a useful guide, no two financial circumstances are the same, and therefore you should do your due diligence with the adviser in question before you act on their recommendation.
7. Comparison Websites
A quick google search will turn up a good selection of comparison websites and directories, which much like Investing Reviews, you can use to search for a financial advisor local to you.
How to Choose a Financial Advisor
If you have decided that now is the time for you to seek financial advice, then choosing the right independent financial advisor for your unique circumstances will be an important financial decision. Here in the UK, the choices are endless, however, when making your selection there are a few key elements to take into consideration.
1. Is the Financial Adviser Authorised by the Financial Conduct Authority?
Being authorised by the Financial Conduct Authority can guarantee that the financial adviser you are considering will always act ethically and on your behalf.
2. Check the Adviser has Professional Indemnity Insurance
Whilst this is not crucial in order to provide excellent advice, Professional Indemnity Insurance does offer peace of mind.
3. Check for Historical Complaints
Checking first with the Financial Ombudsman Service as well as the FCA for any historical complaints regarding bad advice made against the financial adviser or firm you are considering can be invaluable. If a past client has had to claim compensation this can be a red flag.
4. Ensure the Advisor is Independent
Obtain confirmation from the financial adviser or firm that they can access products and financial services from the whole of the market and have no affiliation to any particular provider.
5. Understand the Process
Most financial advisors and firms will offer an initial meeting free of charge so you can understand how they can bring value to your current circumstances. It is always useful to see an example of their financial planning so you know what to expect. Understand whether this is an end to end user journey with ongoing reviews and support and whether reviews will be on a monthly or annual basis, as well as whether this level of service is necessary for your requirements.
How Much Does a Financial Advisor Cost?
It is compulsory for an independent adviser to declare all costs upfront to any person who is a prospective client. This gives you the opportunity to compare and negotiate with financial advisors and also provides you with reassurance that the adviser in question has no conflicting interests such as a commission from a product that they recommend.
Pricing structures vary between different financial advisers and the money you pay will largely depend on the scope of advice and support you need as well as the level of qualification your advisor holds. For simple one-off jobs, it may be more cost-effective to engage the services of a chartered financial planner. The three main methods that advisers will charge for their time are:
- Percentage fee: this will usually be worked out as a percentage of the amount of money you wish an adviser to manage on your behalf. This percentage can range anywhere between 0.5% to 5%, which may depend on the sum of money you are looking to invest.
- Fixed fee per service: With this payment structure you will be charged a fixed cost for each solution you require, i.e. mortgages advice, pensions freedom, or putting protection in place. This may be the most cost-effective method of paying should you require once only advice for a specific area of your finances and is useful if you require an upfront cost.
- Hourly rate: As always with an hourly rate, ensure you get an idea from your adviser of how long this kind of job has taken them previously so can know what cost to expect. This rate can vary between £50 and £250 an hour, depending on what you need and the level of credential your adviser is in possession of.
Questions to Ask A Financial Advisor
Financial advisors often get asked a series of questions from potential clients which can help ascertain whether or not you are a good match. Don’t be afraid to dig into the level of service they are offering and make sure you have the answers to the following questions:
- Are they independent or restricted advisers?
- What adviser qualifications are they in possession of?
- Do they give advice face to face or over the phone?
- How often will they review your portfolio?
- Will you deal with one advisor or get passed around the firm?
Is it Worth Getting a Financial Advisor or Should You Do it Yourself?
Due to the associated costs when receiving professional financial advice, many people will consider whether they can actually manage their own finances efficiently. Whilst it is possible, before you consider embarking down this route you should ask yourself some key questions:
- Do you have the time to evaluate your options, study the market, and find the most appropriate products to suit your circumstances?
- Do you have the appropriate level of knowledge or will you be reliant on Google?
- Are your finances currently organised and do you have a fair idea of your financial health?
- Are the changes you are looking to make potentially life-changing?
- Have you got large amounts of savings and or investments or are you experiencing a significant event such as inheriting money, becoming a parent, divorcing, or retiring?
The emergence of robo-advice platforms such as eToro and Nutmeg have given investors a low-cost way to invest that requires minimal investment knowledge using Exchange Traded Funds with high, medium and low-risk options. Whilst these do make an appealing option, they are in no way tailored to your personal circumstances and should you fail to make the right decisions, you will only have yourself to blame.
Can You Access Financial Advice For Free?
Yes, you can. There are a number of options that come without any personal cost to you, however, these are limited in the range of advice they can provide. The Money Advice Service is a good place to start with free impartial advice that is run by the government. The Money Advice Service covers a range of financial advice including debt, mortgages, saving, benefits, pensions and protection.
Best UK Financial Advisors
True Potential Wealth Management Ltd
With financial advisors all over the UK, True Potential Wealth Management are a fully modernised financial advisory service that harnesses technology in order to provide both private and corporate clients with a transparent service with the sole aim of helping them realise their financial goals. They provide their clients with a user-friendly, award-winning app from where you can track all your investments and bank accounts in one place for complete peace of mind.
AFH Wealth Management Ltd
AFH offer fully independent financial advice across 12 offices nationwide. The 200 advisers at AFH offer a completely holistic approach to ensure your financial needs are met from end to end, kicking off with a no-cost initial meeting in which you will receive assistance identifying your personal goals and objectives.
St. James’s Place Wealth Management
At St James’s Place they have taken a different approach to managing your investments. Rather than be tied down to in-house investment managers, at St James Place they source external fund managers so you can gain access to leading investment managers from across the globe. You can access face to face advice from their highly skilled financial advisors across the UK.
With offices across the UK, Flying Colours offer personalised, independent advice and investment management. Totally independent, and without any restrictions, Flying Colours are well-positioned to offer clients a bespoke, local service starting with a free consultation at an office near you. All the independent advisers are qualified to at least diploma level, with some financial advisors having achieved Chartered status.
Frequently Asked Questions
What is the difference between independent financial advisers and restricted financial advisers?
A financial adviser, sometimes referred to as a restricted adviser, can only give restricted advice on a limited number of products and therefore they don’t always have access to the best products to suit your unique circumstances.
Conversely, an independent financial adviser has access to the entire financial market and can therefore match the best product for your situation as well as providing you with completely unbiased advice to suit your needs.
I see adverts for Financial Advisors and Financial Planners, what is the difference?
A financial adviser has the primary ambition of helping you to manage your money including: Investment management, Estate planning, Retirement planning, Insurance, Debt repayment and Tax planning.
Financial planners however are one type of adviser who specialises in creating a plan to help companies and individuals achieve their long term financial goals and can include entities such as: Retirement planning and Education funding planning.
It is important to note that whilst a financial adviser will possess qualifications and credentials to help them achieve their purpose, just about anyone can call themselves a financial planner without possession of any qualifications.
Is the advice I receive always in my best interest?
Over the course of the last few years, the regulations governing advisers and financial services have tightened, providing consumers with much higher standards and protecting their interests. This means that when you engage the services of a financial advisor who is authorised and regulated by the Financial Conduct Authority (FCA), any advice you receive is always in your best interest.
Being regulated by the FCA also ensures that the financial adviser in question is in possession of a minimum attainment of Diploma but can be qualified all the way up to Chartered status. Financial firms in possession of these qualifications must also be a member of the Personal Finance Society. The Financial Services Compensation Scheme is another body protecting consumer rights and may provide cover of up to £85,000 should the firm you use go bust.