What are the different types of financial advisers?

There are two types of financial advisers:

  • Independent financial advisers (IFAs) give unbiased advice about the whole range of financial products from all the different companies available

  • Restricted advisers give advice on a limited range of products. They may specialise in one area, for example pensions, or they may only offer advice on products offered by a limited number of companies

  • It’s best to make sure you know and understand what type of advice your financial planning company is able to give you, so that you know what to expect before meeting them

 

What does a financial adviser do?

Financial advisers look at your personal circumstances and your financial plans for both the immediate future and long-term, and then they recommend products and a strategy to help meet your needs.

 

Should a financial adviser have qualifications and be regulated?

Chris Riley, CEO of Seventy Financial Planning, is a chartered fellow of the CII.  As well as looking for this qualification, we would also state that financial advisers need to obtain a “Statement of Professional Standing” from the CII annually.

All financial advisers should be registered with the FCA. This means they meet the right standards and you get more protection if you’re not happy with the service. For example, you can complain to the Financial Services Ombudsman and may be able to claim compensation if things go wrong.

 

How do I know if the financial adviser gave me the right advice?

When you see a financial adviser they should give you the right kind of advice for your financial needs. You can check that your adviser is going to be meeting your basic needs by keeping in mind that the financial products that an adviser recommends should:

  • Be affordable for you

  • Take account of whether you want to save for the long or short term

  • Be suitable for the amount of risk you want to take

  • Take account of whether you pay tax

If an adviser ignores these points and recommends a product that is not right for you, and you later lose money because of this, you can complain.

 

Can all financial advisers give me the same advice?

An adviser only has to give you the right kind of advice within the limits of what they are qualified to do. For example, if you see a restricted adviser, they will only recommend a suitable product for you from the range of products they sell. A restricted adviser also doesn't have to tell you that you could buy a similar product from another company at a cheaper price, for example.

For this reason, it is generally better for you to go to an independent financial adviser who will be able to look at products from the whole of the market, and offer you a wholly independent, rounded service.

 

What things should I do at my first financial adviser meeting?

  • Check that the adviser you are seeing is qualified to give you the advice you need

  • Take notes so that you have a clear record of what was said at the meeting

  • Ask lots of questions and make sure you understand everything you are told

  • Take your financial information with you – a list of your outgoings, income, loan commitments and end dates and what you want to save for in the future

  • Be prepared to answer questions honestly. A financial adviser will ask you lots of personal questions about your financial plans and personal circumstances so that they can recommend the most suitable products for you

  • Check that your personal information is kept confidential, and find out whether it is used for marketing purposes

 

What should I think about before I see a financial adviser?

  • Are you planning for a particular event? For example, your retirement or saving up to buy a house or your children’s university fees. You need to look at your life and work out what events you need to plan for financially

  • Do you have spare money to invest? Take a good look at your finances to see how much you can afford to save. Make sure you have cleared any outstanding debts, loans or bills first

  • How much risk are you prepared to take with your money? When you invest money, there’s a chance you could lose money on your investment. Some investments are riskier than others but can make you more money if they do well. As a general rule, the longer you invest for, the more likely you are to make money, rather than lose it

  • How long do you want to tie up your money for? The length of time you are willing to invest for affects the types of products an adviser will choose

  • Do you want advice on different kinds of investments? For example, ethical or environmentally friendly investments or financial products that invest according to Shariah principles?

  • Are you looking for advice or just information? You may want someone to advise you what to do with your money or just information about a financial product so that you can make your own choice. Some financial advisers will provide both information and advice

  • If you want one-off advice or advice on an ongoing basis? Make sure you are clear about how much the advice will cost you and that you can afford it

 

What should a financial adviser tell me?

When you first meet with a financial adviser, you should be given clear information on the services the adviser offers, including:

  • Whether the advice is independent, or restricted. If the advice is restricted, the adviser should tell you how it is restricted. For example, whether they are only offering products from certain companies

  • The level of advice you will receive. For example, you may just be looking for information to help you decide what to do, or you may need someone to suggest the best options for you

  • How much you'll have to pay for the advice

  • What qualifications and experience the adviser has, and how long they’ve been operating as a financial adviser

 

What should a financial adviser give me?

Your adviser should give you key facts and information about:

  • The adviser or firm you are using and the services they offer

  • The products they have recommended for you

  • The right to change your mind about taking out a financial product and how long you have to do it

  • Your right to be given further information or an explanation if there is something you don’t understand

  • How to make a complaint if you’re not happy with the service or product provided

  • Who the firm is authorised and regulated by

  • The cost of the service and/or product

If the adviser doesn't give you this information, make sure you ask them for it.

 

Will I have to pay a financial adviser for the advice?

You will have to pay for financial advice and you may also have to pay charges on the financial products you buy – how much, and what format the payment takes, varies from adviser to adviser.

So you need to make sure that you’re very clear about how much the advice is costing you, and what the charges are on the products you are recommended. Make sure you understand all the costs involved and don’t be afraid to ask questions if something isn’t entirely clear to you.

Advisers are no longer paid by commission. This means that the advice they give should not be influenced by any commission they may earn on a particular investment. Instead of commission, advice can be charged as:

  • An hourly rate

  • A set fee according to the work involved

  • A monthly retainer

  • A percentage of the money invested

Your adviser should explain to you how much their advice will cost and together you will need to agree how to pay for this. You could pay them upfront or you may be able to agree that the adviser will take it from the sum that you invest. Your adviser should set out the charges in a clear way, and they should also make sure you understand how much you are paying before you leave your appointment with them.

 

Start planning your future. Speak to us today.

Contact Us

Seventy Financial Planning
The Apple Store, Haggs Farm,
Haggs Road, Follifoot, Harrogate,
HG3 1EQ

01423 611004

[email protected]

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