How to Choose a Great Financial Adviser
What is a financial adviser / financial planner?
A financial adviser is someone who can help advise you on your money. This will usually cover the recommendation of financial products like investments, pensions, insurance and so on. A financial adviser has a professional responsibility to provide you with a financial solution to meet your needs.
A financial planner is similar to a financial adviser but will usually focus more on you and your goals. They will then recommend financial products where a need arises to help you meet your objectives.
While this distinction may seem small, in reality there is often a significant different between advisers and planners. Usually financial planners do provide full financial advice but usually focus more on you as a person, your goals and objectives before getting into a discussion about financial products.
When thinking about finding a financial adviser or financial planner, you should think about what you need from them and how they might be able to help. Are you looking for something simple like a review of your investments or do you want a more in-depth discussion about you and your money. If it’s the latter, try to find a good financial planner. If it’s the former, either a financial adviser or financial planner should be able to help.
From this point on, we’ll simply refer to ‘financial advisers’ but everything in the rest of this article refers to both advisers and planners equally.
How do I know the adviser is legitimate?
Without doubt, the most important thing to check with any financial adviser is that they are registered with the Financial Conduct Authority (FCA). This is the UK financial regulator and all advisers should be registered. You can look at the FCA register to check that the firm you are looking at is registered, meaning they are authorised to give advice and have passed a number of background checks. This includes having appropriate qualifications, professional standing and capital reserves. Most advisers will have a statement such as ‘Authorised by the Financial Conduct Authority’ on their website and stationery and some may quote their authorisation number. It is prudent to check this on the FCA register before engaging their services.
All advisers also need to have an annual ‘Statement of Professional Standing’ (SPS) certificate, issued by an FCA-accredited body. This will attest to their qualifications and continuing professional development and their inclusion on the FCA’s register. If you’re in any doubt, request to see the SPS for the adviser you are considering working with.
Should I opt for an independent or restricted adviser?
There are two types of financial adviser. ‘Independent’ advisers are obliged to consider all products and services and cover the full range of financial products. ‘Restricted’ advisers may only recommend the products of a particular company or have a limited number of companies they work with. Another reason some advisers may be ‘restricted’ is that they only offer advice on particular areas such as pensions or investments and don’t cover the full range of financial products. Be careful because restricted advisers don’t have to advertise that they are ‘restricted’ upfront, but they do have an obligation to explain their restriction before you sign-up to become a client. Only independent advisers can use the term independent, but again, care is needed as words like ‘impartial’ or ‘unbiased’ are often used in the promotional materials of both independent and restricted advisers.
An independent financial adviser is generally seen as the best option here, but the additional work involved in being independent could mean that charges may be higher for this type of service.
What qualifications should an adviser have?
All regulated financial advisers must have a basic level of qualification. This is known as ‘Level-4’. Some advisers have now achieved ‘Level-6’ and are known as either a ‘Chartered Financial Planner’ or ‘Certified Financial Planner’. There are a myriad of different qualifications concerning specialist areas of advice like mortgages, equity release and so on, but it is this core level of qualification that you should look for. Ask if the financial planner you are considering is ‘Chartered’ or ‘Certified’ and if not, Google their qualification and check them out.
For a detailed list of financial adviser qualifications, check out Unbiased qualifications.
What charges will I pay?
The next consideration should be charges. There are different ways advisers can be paid. This is usually via one or more of the following methods:
- An agreed percentage upfront fee (eg. 2% of an initial investment amount)
- An agreed percentage annual fee (eg. 1% of an ongoing investment amount)
- A fixed fee (eg. £1,000 for a financial planning report)
- A fixed monthly fee (eg. £50 per month for financial planning services)
- An hourly fee (eg. £200 per hour for all work undertaken)
You should think about the charging method you are most comfortable with before selecting a suitable financial adviser. No one method is necessarily superior to any other, but each has pros and cons.
The other things to think about when it comes to charging are:
- Am I free to start and stop charging as I like or am I tied into a contract?
- Are the charges ‘all in’ meaning I might be paying for services I don’t actually use?
- Are the charges clear and transparent or are there likely to be hidden costs along the way?
- Are the charges shown upfront on the adviser’s literature and website – and if not, why not?
What extra services will the adviser provide me?
It can be difficult to compare financial advisers when it comes to their service offering. While some may provide an annual meeting and investment review, others may deliver a lot of ‘added value’ services as well. It is worth asking what else you get on top of the standard work an adviser will do for you and consider whether these are things that could benefit you. These services may include things like:
- Regular email newsletter
- Telephone access to financial advisers
- Seminars and events
- Access to an online client portal
- Online tools and services
- Digital magazine
- Additional financial planner meetings as required
Do I like the look and tone of the firm and/or adviser?
Just like with any company you choose to use, you need to make sure the financial adviser you work with looks and acts the part and they fit with what you are looking for. You might look at the quality of their website, their business card, social media or their personal appearance. All these things together will help you form an image of the company and adviser you are considering. Are they professional, stuffy, modern, interesting, staid, etc. Again, there is no right and wrong, but you need to find an adviser that’s a good fit for you and one that you are impressed with when you look at their profile or meet them in person.
What do other people say about this adviser?
Nowadays, most people check out the reviews before they buy pretty much anything and the same is true when selecting a financial adviser. Websites like VouchedFor and Google can be a great place to start. Increasingly, more advisory firms are conducting customer satisfaction surveys and publishing their results as we do. Most adviser website will also feature testimonials from happy clients and some firms may let you speak to these clients to validate the quality of their services.
However, probably the best source of reviews is people you know. If someone you respect rates a particular adviser, this often goes a long way to ensuring they will offer you a great service. This is where schemes like our own ‘Recommend A Friend‘ scheme are useful for existing clients to refer new clients who could benefit from the services of a particular financial adviser.
Can I speak to the adviser before signing up for their services?
Most advisory firms now offer a free introductory meeting either face-to-face, via the phone or online. However this is done, it’s a great opportunity to question the adviser and hear how they think they can help you. It’s important to listen to the tone and way things are said as well as to the content. You need to like what you hear and imagine yourself working with the adviser for years to come. If you can’t, then they probably aren’t right for you.
Where should I look for a great financial adviser?
There are many places you can look for a financial adviser. Personal recommendations are often a great place to start. Beyond that, most people turn to the internet. There are a wide range of financial adviser listings sites like Unbiased, VouchedFor and the Money Advice Service and there are other conventional ways to search like using Google and Yell.com. Remember that some advisers only work in their local area whereas others cover the whole of the UK – either with a number of advisers spread around the country or by using technology such as Skype to interact with their clients. Here are our top places to look for a financial adviser:
- Personal Recommendations
- Web (just Google it)
- Wayfinder (CISI)
- Money Advice Service
We hope that you have found this guide to finding a financial adviser useful and that you feel empowered to find one to perfectly suits your needs. At NorthStar, we believe that more people should be able to access great quality financial advice, financial planning and wealth management and hope this guide can help in a small way to further this cause.