Getting independent financial advice - Print version

Independent financial advice

Types of financial adviser

Financial advisers look at your personal circumstances and your financial plans and recommend products to help you meet your needs.

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 usually best to get independent financial advice so that you can look at the widest range of advice and products available.

Making sure your adviser is qualified and registered

All financial advisers must have the following:

• Level 4 or above of the national Qualifications and Credit Framework
• a Statement of Professional Standing (SPS). This means they have signed up to a code of ethics and have completed at least 35 hours of professional training each year. SPS certificates must be renewed annually so check your adviser‘s is up-to-date.

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.

If a financial adviser is not registered with the FCA, you can make a complaint to the FCA.

Don’t be afraid to ask an adviser about their qualifications and Statement of Professional Standing.

Check a financial adviser is registered with the FCA [https://www.fca.org.uk].

Download our printable guide about getting financial advice [https://www.coventry.gov.uk/downloads/file/35166/adult_social_care_getting_financial_advice_leaflet]

Before you see a financial adviser

How to check you're getting the right advice

When you see an adviser they should give you the right kind of advice for your financial needs. If they don’t, you may be able to complain.

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 [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#what_to_think_about_before_you_see_a_financial_adviser] 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.

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 [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#types_of_financial_adviser], they will only recommend a suitable product for you from the range of products they sell. A restricted adviser doesn't have to tell you that you could buy a similar product from another company at a cheaper price. If you later find this out, you would not be able to complain.

For this reason, it might be better to go to an independent financial adviser [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#types_of_financial_adviser] who will be able to look at products from the whole of the market.

If a financial adviser can't find a product to suit your needs, they must refer you to another adviser who can help you. If they don’t do this, you may be able to complain [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#complaints_about_financial_advisers].

Checklist of things to do at your first meeting with an adviser

Here are some tips about things to do at your first meeting with a financial adviser:

• check that the adviser you are seeing is qualified [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#making_sure_your_adviser_is_properly_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 time to think about any decisions or to compare products with another adviser. You don’t have to sign up for anything on the spot
• 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 to think about before you see a financial adviser

Before you look for a financial adviser, try to work out what kind of advice you need. This will help you find the right adviser for your situation. Here's a checklist of some of the things to think about:

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

Meeting with a financial adviser

What the financial adviser should tell you

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 [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#types_of_financial_adviser]. 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.

Your adviser should also give you a key facts document with 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.

How much will the advice cost

You will have to pay for financial advice and you may also have to pay charges on the financial products you buy.

You need to be 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 compare fees and investment charges between different advisers before you make a final decision. You may be able to get the same product at a cheaper price with another adviser.

Paying for independent financial advice

Ways to pay

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.

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 make sure you understand how much you are paying.

Fees may vary from adviser to adviser, so you should shop around to get the best deal.

There may be extra charges for looking after your investments or providing advice on a regular basis.

How to find a financial adviser

To get advice on the widest range of products and compare costs, you should look for an independent financial adviser. The following organisations can put you in touch with a qualified adviser in your area:

• Unbiased [http://www.unbiased.co.uk] - You can find independent and restricted ‘whole of market’ advisers on their website. Restricted ‘whole of market’ means advisers who can offer available products from all companies, but who may specialise in a particular area, such as pensions.
• Personal Finance Society [http://www.findanadviser.org] - You can find independent and restricted advisers on their website.
• VouchedFor [http://www.vouchedfor.co.uk] - You can find independent advisers only on this website.
• Ethical Investment Research Service [https://www.eldis.org/organisation/A1830].

You may already have financial links with a bank or building society and trust their products, so feel more comfortable about seeking their advice. This is called taking restricted advice.

If you decide to do this you need to be aware that there may be other financial products from other companies that are cheaper or better suited to your needs.

Complaints about financial advisers

You can’t complain to a financial adviser if your investment doesn’t make as much money as you’d hoped. But if you have lost money because of bad advice, wrong or misleading information or poor administration, you can complain to the adviser who originally gave you the advice.

You must follow the company's complaints procedure. If you’re not satisfied with the response, where you take the complaint next depends on who gave you the advice.

If the adviser you saw was authorised by the Financial Conduct Authority [http://www.adviceguide.org.uk/england/debt_e/debt_savings_e/getting_financial_advice.htm#who_gives_financial_advice] (FCA), you should take your complaint to the Financial Ombudsman. To find out if the Financial Ombudsman can deal with your complaint, you can call their consumer helpline on 0300 123 9 123 (8am to 6pm Monday to Friday). There’s also a special complaints form you can download and send to them by post. For more details visit the Financial Ombudsman website [http://www.financial-ombudsman.org.uk].

You can also find out from the consumer helpline whether the Financial Ombudsman can deal with a complaint about a company which is not authorised by the FCA.

If you received financial advice from a solicitor or accountant, who is authorised by the FCA to give financial advice, you may need to take your complaint to the professional body which regulates them.

If you’re not sure where to complain, you can contact the FCA consumer helpline on 0800 111 6768.