When it comes to managing our finances, many of us feel like we need an expert opinion, and we need to find an expert we can trust. A financial advisor can help you through mortgages, pensions, savings, investments and other money matters. What sets an Independent Financial Advisor (IFA) apart is that word ‘independent’: they aren’t tied to any bank, insurance company or organisation so they give unrestricted, unbiased advice.
But before you start working with someone, you need to do some preliminary research. Here are 5 quick tips to get you started on your search for the ideal IFA for your financial needs.
Ask your friends and family
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Word of mouth is a great place to start. Ask friends, family, anyone you trust who they go to for financial advice – a personal recommendation can help you narrow your search down.
Be crystal-clear on what they offer
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The most important question to clarify is what kind of advice they offer: independent or restricted. Since 2012, advisors who aren’t able to search the whole market must call themselves ‘restricted.’ Clarify exactly what their restriction is – for example, some advisors are restricted to a certain field of speciality or certain providers. Make sure you are completely clear on their services, and how that could be of benefit to your situation.
Read more about the differences between the various kinds of advisors in this article from the Financial Conduct Authority.
Check their qualifications
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If this person is going to get intimate with your financial history, you need to be certain that they are qualified to do so. Requirements changed at the end of 2012: IFAs now need to pass ‘Level 4 Qualifications’ in order to practice, so look for a Diploma in Financial Planning (DipFP) or an Advanced Diploma in Financial Planning (ADFP). They also must have a valid Statement of Professional Standing (SFS) – these need to be renewed annually. For more in-depth information, read this article on IFA qualifications.
In the unfortunate circumstance that your IFA has been negligent or offered you the wrong advice your business could suffer a significant financial loss. It is advised that any profession that offer advice or consultancy services require professional indemnity insurance to legally operate, so make sure that your potential IFA has the proper coverage.
Don’t put up with a load of industry jargon
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Don’t feel embarrassed to ask what you think are silly or obvious questions. You need to be able to talk frankly with your advisor; you need to fully understand the answers they give you; and you absolutely shouldn’t be investing in something you aren’t sure about. This could potentially be someone you continue working with for years to come, so you need to feel comfortable, supported and heard!
For more good questions to ask an advisor, read this article on Money Saving Expert here.
Interview around
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As with all major financial decisions – like buying a car – you should ‘shop around’ a bit. Most IFAs will offer an initial, free consultations, so go to a few and see how you feel. Make sure you really weigh up what they say, as well as how they act: someone perfectly charming and lovely might not offer you the right kind of advice. But whatever you do, don’t rush into signing anything!
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Finding a trustworthy IFA can be difficult: our finances are private, sensitive and not to be treated carelessly. If you know what to look for, you can have a more productive, (hopefully) quicker search and establish a fruitful relationship.
Some really great tips Julie. Finding and using external help is really important and one should consult for external help from IFAs because some issues simply require a fresh and outside perspective. Really great effort.
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