How to select an IFA

saxmund

Not sure if this is the right forum for this question, but it seemed to be reasonably relevant. Can anyone here advise me how to go about selecting an IFA?

I believe there is a website from which I can get a list of names, and in Fleet, where I live, there is a large firm (Chadney Bulgin), or I could go to my bank (HBoS) but I beleive they will probably only be able to sell me their own products.

My position is I have recently been made redundant and need to apportion the money between tax planning, paying off mortgage, home improvements and keeping some "for a rainy day" ie the possibility I can't get a job quickly.

There may be some possibility of selling me something as the "tax planning" aspect may include purchase of a pension scheme, although I already have reasonably good pension provision - so I really need some help deciding between the immediate prospect of 40% tax relief or the longer term prospect of paying off the mortgage.

Anyway, any suggestions as to how I go about finding someone good and what sort of fee structure I should expect?

Money_Watch

Probably the best place to start to find a local financial adviser is www.unbiased.co.uk

It's also worth asking family and friends whether they've had any good or indeed bad experiences with local IFAs. When you've got a shortlist, give them a call and find out what fee structure they work on.

dunstonh

or I could go to my bank (HBoS) but I beleive they will probably only be able to sell me their own products.

They are not IFAs. They are tied sales reps. Plus they have just about the worst range of investments of any of the banks.

where I live, there is a large firm (Chadney Bulgin),

I know nothing about this company so any comments I make are not aimed at them. However, my general view is that the larger the company the more likely it is to be run as a salesforce with targets and incentives or with the employer taking the bulk of commission not really giving any room for discounting by the adviser. Also, employed advisers usually have no personal liability for the advice given. Self employed and partnerships do. Getting in with owner or partner can be a good idea. Directors may not have personal liability but they do have an interest in the company reputation and financial standing so they are good to use as well. Plus, owner, partner, directors are likely to be there long term unlike employees who tend to move around.

Anyway, any suggestions as to how I go about finding someone good and what sort of fee structure I should expect?

First thing to realise is that whilst every profession has bad apples, IFAs have the lowest complaints of all advice distribution channels. So, you would expect more good than bad. You tend to only ever hear of the bad because that is the nature of things. Moneywatch has posted the main uk database for IFAs and you can postcode search on that. Dont filter by qualifications as there are too many and its flawed (you may pick to filter those with G60 exam but those with J05, which is the current version of the same exam, will not show or vice versa).

Fee basis is often cheaper but that doesnt necessarily mean you have to pay by cheque for advice. You can use commission offset. i.e. you agree a fee and if a product recommendation results in a commission being paid, that can offset the fee with any shortfall being made up by you or extra commission being used to enhance terms on the product. With pension provision, the hybrid fee option of commission offset is usually a good idea as effectively you get tax relief on the fee.

saxmund

Thanks, dunstonh - useful comments from someone who knows the profession.

davidlee

Find 2-3 IFA near you, interview the selected financial advisers, compare the quality of service and the charges and finally mostly depend on the hours that an IFA shall be devoting to you.

Ian_W

When you find your selection, but before you decide to use one, you might also want to consider
TEN QUESTIONS TO ASK AN IFA.

Don't know if dunstonh has any views on the article but it is written by an IFA I believe.

dunstonh

Thanks Ian, had a look at the 10 questions. Only have a few issues with a couple:

3. Can I come and see where you work from?
I live nearby and would like to see how your operate – I like the idea of seeing my professional adviser in their offices, not on my sofa …

IFAs are generally a cottage industry still. Most work from home offices. That usually means a garage conversion, outbuilding or 4th or 5th bedroom.

That has nothing to do with quality. Indeed, it can often make the adviser more cost effective as they are not laying out £20-30k a year on having an office which needs to be staffed. Remember it is the clients that effectively pay for it.

That is no measure for quality.

. Who do you deal with in the other related professions?
I like the idea of having a triangular service of accountant, solicitor and IFA – is that something you are happy to do, or do you expect to be in charge all of the time?

Although many of us do have relationships with accountants and solicitors you need to make sure that they are not relationships with remunerated links. i.e. some accountants have in-house advisers (and judging by a few regional firms in my area they have sales targets even though they are fee based and if they dint get their targets they get their pay reduced or can be sacked).

I prefer the approach where the IFA can give you 2 or 3 names and let you decide rather than having an all-in-one solution. We all will work together when needed but you dont need an in house relationship.

10. Do you take an interest in our community?

I am not sure how it would benefit the advice given. Does it matter if they sponsor a local football team or not?

Ian_W

dunstonh wrote: »

I am not sure how it would benefit the advice given. Does it matter if they sponsor a local football team or not?

It's a series of TEN QUESTIONS TO ASK ranging from Lawyer, through IFA to Bob the Builder!
I rather thought the last one was a "make weight" to get it to 10.

dunstonh

I rather thought the last one was a "make weight" to get it to 10.

Perhaps given most people are bored stiff by the time you ask an IFA the tenth question, its probably a good job