Do You Need Financial Advice? When To Get It, When Not To Get It Discussion Area

dunstonh

Alramsay said:

My IFA tells me that he is required to take out investment specific professional indemnity insurance for each new investment we make through his company,  adding significantly to overall costs. Does anyone know if this is a FSA requirement? Thanks.

By FSA I assume you don't mean the Food Standards Agency but the FCA - The Financial Conduct Authority.

The FCA require all advice firms to hold PI insurance (or capital to the equivalent of).   PI insurance goes up every year greater than inflation and it has gone up significantly in the last 12 months.  Our own was up nearly 25% and some firms have suffered 500%.     For most advice firms, PI insurance will be one of their larger costs after office and staff salaries.

PI insurance isn't for you specifically.   It's a policy that covers all business transacted that year and historically.  So, whether you transact once, twice or a dozen times doesn't matter unless you are transacting in a high-risk area where the insurer takes more details specifically and prices it accordingly.     The adviser needs PI insurance to trade.  So, if you didn't transact with him, then he would still need it.

it's a strange conversation to have with an adviser as not many will mention their business costs unless you are specifically dealing with a high risk transaction (such as DB pension transfers) and trying to explain why the cost is higher for something like that.

VikingFjordIFA

jos5000 said:

I used the supposedly Free Unbiased.co.uk's 30min financial health/pension/mortgage/investment check for pension advice (advertised on MSE) and had a horrible experience with this and do not recommend it or at least be extremely wary of it.

The IFA who contacted me immediately tried to push an array of non-pension related products. Within less than 10 minutes he became confrontational and told me I sounded like someone who was happy to do their finances 'DIY' so I should not call an adviser expecting free advice, that i was basically taking advantage and that we should end the conversation. The call lasted 10 minutes. What's more the advice he promised to give if i chose to pay £5000 for his service was really basic stuff like getting insurance for my limited company. I have been freelance for 2 years now and cannot sign contracts without various insurances, this is such basic stuff.

I wrote an immediate latter of complaint to unbiased about this - total waste of time and was insulted.

Any IFA should focus on your needs, listening to what they are. Often, clients don't actually know what products they need, but it is the IFAs job to identify what product meet the client's needs. For instance, a client might think they need an investment product (e.g., invest in shares in an ISA wrapper), but as professional advisers we could advise that what they need is to save up for a deposit or pay off credit card debt.

Advisers with large advertising overheads are on a drive to cover these overheads and may forget in the moment what the correct advise should be. 

Sometimes a long-term, important client comes from seemingly meagre and unprofitable initial consultations.