IFA - How to find out if they are any good?

ias76

As with all jobs there are some people who are really good and some not so good.

In the case of independent financial advisors, how do you know they are good? Would you take up references they gave you?

Also how do you access there advise rather than taking them on face value?

Your thoughts appreciated....

Tiggs_2

$17mma wrote:

Someone gave me this link a while back, think cheerfulcat, may want to speak to him/her

http://www.unbiased.co.uk/

that just tells you where they are...not much else.

theres not a lot you can do beyond the obvious" ask your frineds who they use stuff".

you can ask about qualifications (but i know some well qualified IFA's that are complete idiots), you could ask about experience (but i know some IFA's that where giving advice to dinosaurs and they're pretty useless too!)

bottom line is its not that hard to get into a position of experience with ample qualification and still be a tool. So while you may want to avoid the bloke that only started last week.....dont latch onto the first 55 year old you meet with AFPC.

Chrismaths

How to get the best quality of advice is a hard one - there are often many ways to skin the proverbial cat and there is no one way to solve all problems. Regular qualified contributors here often disagree on the best advice in a given situation.

However, it is a bit easier to ensure that you don't overpay for your advice, and eliminate so-called 'commission bias' from the advice (where a product is sold because it carries more commission than another) - which is to either go the fee route (which all IFAs must offer to be independent) or to ensure that they take the same commission across all their products. It is possible to find advisers who will take 1-1.5% commission on all products they advise on, that will eliminate this bias.

As a rule of thumb, avoid big, chain Advisers (such as bank or building society based ones) and try to find smaller practices. This is no guarantee of good advice, but it increases the probability methinks. And ask what is charged, and how much commission they take on products.

Good luck

LOST

where are you based - perhaps some can point you in the direction of recommended IFA's from good previous contact?

EdInvestor

On charges, you could scan the FSA's site beforehand, so that you have an idea of what might be described as ''the norm"

You'd want your IFA to offer a better deal than what's highlighted here.

Get him to quote a fee, and then compare the fee with what it would cost you to pay commission ( mainly the "charges in early years". )

The fee may suddenly look quite cheap.

https://www.fsa.gov.uk/tables

On suggestions for investments, you can check the ratings of funds on this site:

https://www.citywire.co.uk/Funds/Home.aspx

BTW no good IFA is going to be unhappy with a client who asks intelligent questions and is well informed.If he shows signs of getting annoyed at being asked questions, that's a danger signal.

dunstonh

On charges, you could scan the FSA's site beforehand, so that you have an idea of what might be described as ''the norm"

There is no need. Every IFA has to provide you with documents at the point of first introduction (and on subsequent changes in that document) which includes a "menu" of costs. These costs include showing the averages which are set by the FSA and are updated every 6 months. You can compare the charges on those with the averages.

BTW no good IFA is going to be unhappy with a client who asks intelligent questions and is well informed.If he shows signs of getting annoyed at being asked questions, that's a danger signal.

I think that is a very fair statement.

EdInvestor

There is no need. Every IFA has to provide you with documents at the point of first introduction (and on subsequent changes in that document) which includes a "menu" of costs.

They're supposed to.But the FSA did a recent "mystery shopping" check and found that loads weren't doing this - as many as half the total IIRC.

So if they don;tdo it at the start - that's another bad sign to note.

Another thing I would regard as a bad sign is the type of advisor who tries to "baffle you with science", coming up with such complex (and often fast-paced) analysis of your situation that your eyes glaze over and you can't wait to get out of the room.

I've often thought this is a sales trick to get you to sign up - and a way for them to claim there was no misselling - after all, they explained all the risks and options.....

Never agree to anything that you don't understand and if the advisor hasn't got the patience to explain it to you properly, find one that has.

dunstonh

They're supposed to.But the FSA did a recent "mystery shopping" check and found that loads weren't doing this - as many as half the total IIRC.

If you know they are meant to give and they dont then that should tell you something. I believe the FSA mystery shopping didnt state what type of firm was being mystery shopped. Indeed, didnt this cause a bit of an uproar with some as they felt the research should have been segmented to show which distribution channels were failing as the belief was that certain ones were worse than others.

Another thing I would regard as a bad sign is the type of advisor who tries to "baffle you with science", coming up with such complex (and often fast-paced) analysis of your situation that your eyes glaze over and you can't wait to get out of the room.

Thats a difficult one because if you really struggle with financial services and are not interested then anything would seem as it is complex. For example, asset allocation is more difficult to follow than a bog standard balanced managed or distribution fund.