Do you need a financial adviser? And how to choose one

Choosing a financial adviser is a big decision. Getting the right adviser and the right advice can make a massive difference to your financial future.

If you’ve never used a financial adviser before, it’s natural to feel unsure about where to start. How does the process work? Can you really trust their advice? We’ll explain what you need to know.

What’s on this page?

• What is financial advice?
• Do I need a financial adviser?
• What might change about financial advice in future?
• What can a financial adviser help with?
• What is an independent financial adviser?
• How to find an independent financial adviser
• How much does a financial adviser charge?
• What to expect from a financial adviser
• What to do if you’re not happy

What is financial advice?

Financial ‘guidance’ and financial ‘advice’ are two different things. There are several organisations, such as Citizens Advice, MoneyHelper and Pension Wise, that offer free financial guidance.

This will give you an overview of your options without specific product recommendations. Financial advice means specific recommendations that are tailored to your personal situation.

At the moment, there are some circumstances in which you can get free advice. For example, debt advice and help with benefits is usually free.

• Read about the best places to get free financial advice. 

Do I need a financial adviser?

For more tailored financial advice, you’ll currently need to hire a regulated financial adviser who can offer advice suited to your circumstances. They can also recommend specific products or investments.

According to research from financial advice technology company Intelliflo, two-thirds of people receiving financial advice are aged 50 to 79. 

Jason Hollands, managing director at wealth manager Evelyn Partners, says that when people reach their 50s, it often brings their personal finances sharply into focus.

Children may have flown the nest, a mortgage might be substantially paid off and earnings are typically at a peak. Importantly, retirement no longer seems a distant prospect and so preparing for it becomes a priority. 

“This is a key time in life to consider seeking advice from a financial planner or financial adviser if you have not previously done so. You can get help in identifying your financial goals, see where your savings and investments currently stand and develop an action plan to deliver on those goals,” he says.

Hattie Spurrell, director at financial adviser comparison website VouchedFor.co.uk, says many people choose to engage a financial adviser in their 50s, often prompted by the prospect of retirement on the horizon.

“Professional financial advice can also help you plan how to allocate lump sum payments (from inheritance, redundancy payouts, or the sale of a business or property,” she adds.

Figures from the Lang Cat consultancy estimate that new clients typically approach a financial adviser with an investment portfolio of more than £400,000, while the average age of an advised investor is 59.

What might change about financial advice in future?

In future, it should be easier to get ‘light-touch’ financial advice for free. The regulator Financial Conduct Authority (FCA) recently launched the biggest shake-up to financial advice in more than a decade. This will be useful for people who want some targeted support on their finances but who don’t have enough money for, or don’t want, full financial advice. 

The FCA’s proposals are to make it easier for companies to give some targeted free support without needing to be regulated to give full advice.

For example, a pension company would be allowed to suggest an alternative pension contribution rate to customers who might be under-saving for retirement. Or a different drawdown rate to someone who seems to be drawing down too much of their pension for that to be sustainable later in their retirement. 

Currently firms can inform consumers that there are alternative investment funds with lower charges than the one they are investing in. Under the proposed changes, a firm could suggest a particular fund which would offer better value.

Tom Selby, director of public policy at AJ Bell, said: “The existing regulatory framework makes it difficult for firms to offer anything beyond relatively basic information to non-advised customers without risking straying over the boundary from guidance to advice.

“This means millions of people who don’t take regulated advice are essentially left to make often complex retirement decisions on an island, without receiving the help they require.

“Regulated advice remains the gold standard but the proposal to create a new ‘targeted support’ regime allowing more personal help to be provided for free could be a gamechanger for consumers, potentially helping millions of savers make better-informed decisions about their finances.”

Figures from the Financial Conduct Authority’s Financial Lives Survey shows that in 2024, only 8.6% (4.6 million) of UK adults had received regulated financial advice in the previous 12 months. 

This suggests that there might be an ‘advice gap’ where many people who would benefit from financial advice are not seeking it out.

What's more, AJ Bell says that three-quarters of over-45s have no clear plan about how to take money from their retirement pot and only 1 in 10 people are receiving regulated advice.

What can a financial adviser help with?

A financial adviser – whether independent or restricted – can help you get clarity on your goals for the future, and the financial steps required to achieve them, explains Spurrell.

This might include:

• Defining how much income you need to retire
• Whether to consolidate your pensions 
• How much to contribute to your pension before you retire 
• How best to drawdown on your pension when you retire. 

“They can also advise on adequate protection to plan for potential care costs, as well as helping you think about your estate and, if relevant, planning for inheritance tax,” she adds.

If you only need advice about your mortgage, a mortgage broker or mortgage adviser might be more suitable than a financial adviser. 

What is an independent financial adviser?

In the UK, a financial adviser will be either ‘independent’ or ‘restricted’. Independent financial advisers can offer advice on all areas of personal finance – such as mortgages, pensions, life insurance and investments.

A ‘restricted’ adviser is different. They can either only recommend products from certain providers, or will focus on one product area (pensions, for example).

How to find an independent financial adviser

Many people find an independent adviser via word-of-mouth or through an internet search – for example, “financial advisers near me”.

Adviser comparison websites can also help. Unbiased.com is a free service that connects you with independent, FCA-regulated financial advisers. Alternatively, VouchedFor is a directory of verified advisers with reviews from clients.

Only regulated advisers can legally provide specific financial advice in the UK. You can check a firm or adviser’s regulatory status by searching the Financial Services Register.

How much does a financial adviser cost?

Advisers might charge an hourly rate, a fixed fee, or a percentage of your investment portfolio. They are not allowed to earn commission on investment products.

Advisers typically charge between 0.5% to 2% of your investment portfolio a year, on top of other fixed fees or hourly rates, according to Unbiased. As an example, on a portfolio of £400,000, an annual advice fee of 1% would amount to £4,000 per year. FCA rules mean advisers need to clearly explain how much their advice will cost.

Fee structures should be both explained to you in person and given to you in writing. This should make it clear if the adviser is charging for one-off advice, or whether there are ongoing costs for regular reviews.

What to expect from a financial adviser

The initial meeting with your adviser will normally be free and be conducted as a two-way conversation, not a sales pitch. 

Hollands of Evelyn Partners says: “They will want to know what savings, investments, and pensions you have in place, whether you have any dependants and whether you own your home or have any debts. 

“Importantly, they should also want to find out what your aspirations are and what you care about – living life to the full or frugal, whether you wish to leave money to children or causes you care about, whether you have ethical red lines you don’t want to cross with your investments. So there will be a lot of listening, as well as posing questions.”

Your first meeting is your chance to ask what their services cover. Advisers usually offer an ongoing service which includes annual reviews of your financial situation and investments, updates on changes in law or tax that affect you, and action to rebalance your investments to stay aligned with your goals.

• We explain here what you might want to ask a financial adviser.

During your first meeting, a client should expect to share what they’re looking for help with and find out whether a financial adviser can assist with their request, says Karen Barrett, founder of Unbiased.com. 

“It’s a good opportunity to check if the adviser is independent, and what to expect long term, as well as their qualifications. An adviser will be happy to share proof of their qualifications. You can confirm a firm or individual adviser is regulated by checking the FCA register.” 

What to do if you’re not happy

If you’re not happy with your financial adviser, you should put your complaint to them in writing in the first instance. Detail exactly what you’re not happy about and how you would like them to put things right.

If you’ve already tried complaining to the adviser, you can ask the Financial Ombudsman Service to help resolve the complaint (as long as financial adviser you use is regulated). This is a free service. If it thinks you have been unfairly treated, it can ask the adviser or their firm to put things right and in some cases to pay compensation.

The Financial Services Compensation Scheme (FSCS) is a separate safety net covers up to £85,000 of investments per person, per product. The scheme protects you if your financial adviser goes out of business, or the firm that provided your investment product fails. 

You can complain about bad advice that caused you to lose money. But you won't usually be compensated for investments falling in value, or if a company in which you hold shares goes bust.

For FSCS to be able to protect you, the Prudential Regulation Authority (PRA) or the FCA must have authorised the provider or adviser, as well as regulated the service and product it provided.

It’s not a bad idea to ask at the outset for your adviser to confirm that the activity they are carrying out for you is a regulated activity and FSCS protected.