Do you need a financial adviser?

Paul Lewis / 10 February 2021

Do you really need a financial adviser? Paul Lewis looks at the options available from the Government, and how to find reliable independent advice.



When people ask about financial advice, they are usually thinking of finding a regulated, professional, financial adviser who can look at their circumstances, their money, their needs, their hopes and advise them what to do. But there is a preliminary question to ask.

Do you need financial advice of that sort? It can be expensive and nowadays unless you are investing tens of thousands of pounds or probably hundreds of pounds a month there may be no need for it. And for many good advisers you will not have enough 'wealth' for them to want you as a customer. The best sources of free advice are three that are offered by the Government.

The Money Advice Service

The Money Advice Service has an excellent website, moneyadviceservice.org.uk, giving information and advice on a whole range of money issues, some of which many financial advisers will know little or nothing about.

The Pensions Advisory Service

If you have pension questions, then The Pensions Advisory Service, pensionsadvisoryservice.org.uk, provides a lot of information and has an excellent helpline, 0800 011 3797. The call and the service are free.

Pension Wise

For specific advice about your pension and cashing it in once you reach 55, check the Government's Pension Wise service, pensionwise.gov.uk. If you are over 50 you can call 0800 138 3944 (free) to book an appointment for free one-to-one telephone advice or a face-to-face interview at a nearby Citizen's Advice.

Keep control of your finances, save money and avoid getting ripped off with Saga's extensive range of money articles.


Choosing a financial advisor

If you want professional, regulated, financial advice there are three key rules I use.

1. They must be independent

Only use an Independent Financial Adviser (IFA). That means either they give advice on all financial matters and look across the whole of the market, or they give advice on a specific type of product, such as annuities or pensions, and not on other products. But they still look across the whole market relating to that product. Any adviser who is not independent will be tied to one or more firms and therefore can only recommend products offered by those companies. They are called 'restricted' financial advisers, though hardly any of them use that term.

Never use an adviser who is restricted. Find out by asking, 'Do you offer independent financial advice?' If the answer is anything but a clear 'yes', reject them. Many work for a bank or insurance company and can only recommend products they provide. Often this is just sales masquerading as advice.

2. Opt for chartered financial planners

The very best qualified financial advisers are chartered (or certified) financial planners. This brings you down to the best qualified 6,000 or so of the 33,000 regulated financial advisers. They have put a lot of effort into being the good guys and the chances of a bad guy (or gal) sticking with it are small. Sometimes it is the firm that is chartered, which means that at least some of their advisers are chartered themselves and the rest are probably working towards it.

3. Do not pay by percentage of investments

My third criterion is to use a financial planner whom you can pay in pounds. Never choose one who wants to charge you a percentage of your investments every year. You earned, made, or inherited that money. Charging an annual percentage is like taxing your wealth. Even the Government does not do that. It is a hangover from the days of commission when advisers lived on a percentage of the products you bought that was paid to them year after year.

The fees can still be paid from your savings or investments but as a price for a service not an annual tax. That can seem expensive - £1,500 or £2,000 to advise about cashing in a pension, for example. But if you cannot afford the fee in pounds you probably do not need financial advice.

However, one firm that fulfils all my criteria and has been operating for a year now is Bancroft Wealth Management, bancroftwealth.co.uk, which charges a flat fee of £500 a year whatever your wealth - and you can stop before the end of the first year. Worth it if you have significant sums.

Finding your IFA

Never use Google or other search sites to find financial advice. The firms that come top will pay to be there and may be bad - or worse.

There are several sites that help you find an IFA. My favourite is Adviser Book, adviserbook.co.uk. Unlike some others, no-one pays to be included. It has the complete list of more than 12,000 FCA regulated adviser firms but it does not yet list individual advisers.

It states who is verified as independent and you can filter by qualifications, specialisms, and how fees are charged. Remember that anyone who advises about pensions must have a specific pensions qualification.

Other sites such as unbiased.co.uk and vouchedfor.co.uk, have their pluses and minuses for finding an IFA but as firms normally pay to be listed, many advisers are not included.

When you have found a few independent, qualified planners that seem OK, check their websites. Favour those that tell you clearly how much they charge. Certainly make that your first question when you meet them, at present probably on the phone or virtually. Before this, prepare all the information they will need about you and your money. Most advisers will give you one free session. If at the end of the meeting you do not like them, do not be embarrassed to say a polite 'no thank you' and find another.

 

Try 3 issues of Saga Magazine for just £3

Subscribe today for just £3 for 3 issues...

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.