IN TIMES like this, good financial advice can come into its own. Thanks to the credit crunch and the woes of the global economy, households across Scotland are struggling with myriad financial issues, from budgeting and cutting bills to retirement planning and tax mitigation.
According to advice promotion website www.unbiased.co.uk, some 250,000 people requested details of local independent financial advisers (IFAs) in the first six months of this year.
Yet most of us negotiate our way through this perilous minefield
without guidance from the professionals who are there to help. The cost of advice is one reason for this, as is a lack of trust in advisers, while many people turn to their bank or building society for advice. But only IFAs and financial planners can offer truly comprehensive financial advice and offer access to the whole of the market for financial products.
So, how do you go about finding an IFA or financial planner you can trust and who is best placed to meet your needs?
1Have a clear understanding of what you want to get from meeting a financial adviser, whether it's achieving financial goals, future planning, specific issues or situations. Only if you are clear as to your needs can you effectively go about finding someone who is in tune with those needs.
2 Think about how you want to pay for advice. Many IFAs are paid by commission from the providers of the products they sell and providers compete to offer the best commission payments. If you believe that this lacks transparency, compromises the adviser's integrity or at least influences the advice they give (consciously or not) a fee-based adviser may be better, and IFAs are increasingly moving to this model.
Either way, make sure you ask how much you will have to pay. "The cost of advice should be disclosed upfront so you know what to expect," said Sue Whitbread, communications director at the Institute of Financial Planning (IFP). "Whether they charge by fees or commission, every IFA should give a quote for the work they believe is needed."
3The best way of finding an adviser in your area is through word of mouth – a recommendation from someone you trust offers valuable peace of mind. Always check they are authorised, however, by calling the Financial Services Authority (0207 066 5256) or visiting its website, at www.fsa.gov.uk/ register.
If recommendations aren't forthcoming, try IFA Promotion.
On its website – www.unbiased.co.uk – you can search for IFAs in your area by specialisation, payment type, qualifications and even specify gender.
The Institute of Financial Planning has a similar search function on its website (www.financialplanning.org.uk), or you can call 0117 945 2470.
4Just because an adviser is listed by these organisations and has some qualifications is no guarantee of quality. The range of financial advice qualifications is vast and can be confusing. On top of the generic certificate of financial planning (CFP) qualification are several more specialised qualifications covering areas including mortgages, investment, pensions and equity release.
However Graeme Lind, wealth adviser at Towry Law in Edinburgh, said the standards of the qualifications IFAs are expected to have are inadequate.
"In an industry as important as the provision of financial advice, most rational people would expect to find stringent qualification standards. The reality, regrettably, is otherwise and the hurdles to becoming a qualified financial adviser are astonishingly low." As this implies, there's no fail-safe way of finding a professional, quality IFA or financial planner, but one that has more than the minimum qualifications required has spent a lot of personal time improving their knowledge and expertise.
"Look for advanced qualifications above the CFP," advised Whitbread. "Ask the adviser what qualifications they have, especially if you have a particular area of need." For instance, if you're looking for pensions help, ask about qualifications in that area, such as G60.
The large financial planning firms increasingly insist that their advisers reach a certain level of qualification, with a growing number emphasising chartered status. However, there are still only 800 or so Chartered Financial Planners, who are required to take a range of papers testing their all-round technical competency.
5 Meet several different advisers before choosing one. Most will give you a brief consultation for free, giving them a chance to explain what they do and allowing you to ask any questions you have.
"A lot of it is down to the relationship between the IFA and the client," said Whibread. "Find one who works with people like you where the charges are appropriate and where you're comfortable with the level of service."
When you settle on an adviser, you'll spend some time providing information about yourself and your financial circumstances in what's called a fact-find. This is crucial for advisers to understand your needs and requirements. If they discuss specifics before your needs have been explored in depth, they aren't doing their job properly.
There's no fool-proof way of finding an IFA, but a good idea of what you're looking for, a bit of homework and plenty of questions can go a long way.
What to ask an IFA or financial planner:
1 – Are they authorised by the FSA?
2 – Are they truly independent (rather than tied or multi-tied) and therefore able to advise on the whole of the marketplace?
3 – How will they charge for their service – fees, commission or a combination of the two?
4 – How much will it cost?
5 – What qualifications do they have?
6 – What services do they offer? For example, is it a one-off meeting or do they conduct regular reviews, alert you when things happen and provide valuations?
7 – Do they advise across the whole financial planning spectrum?
8 – Will the relationship be with the same adviser or include others in the company?
The full article contains 984 words and appears in The Scotsman newspaper.
