IFA's

RobStaffs

What professsional bodies should I be looking for when it comes to choosing an IFA? Is there any protection for people who choose to go with an IFA in terms of advice when it comes to managing financial affairs?

dunstonh

What professsional bodies should I be looking for when it comes to choosing an IFA?

All IFAs have to belong to a professional body which meets the FCA requirements. There are only two major ones and it is the FCA that sets the standards. So, you dont need to be concerned about which body they use. All bodies will issue the IFA with an SPS. A statement of professional standing. That is a regulatory requirement. So, you could ask to see that. Personally, no-one has ever asked to see mine. If the adviser is on the FCA register, then that is usually good enough.

Is there any protection for people who choose to go with an IFA in terms of advice when it comes to managing financial affairs?

Yes. You get access to the FOS and increased FSCS protection (not in value but the areas it covers in paying out). That is not a major issue in most areas but has been seen multiple times in the last decade. The FOS and the FSCS both tend to award against the adviser if non-mainstream options go on to fail whereas DIY investors in those areas get reduced or no protection. Basically, if a product or investment fails, use of an adviser gives you a second avenue to pursue in getting your money back. If mainstream is used then the chance of failures are low.

RobStaffs

dunstonh wrote: »

All IFAs have to belong to a professional body which meets the FCA requirements. There are only two major ones and it is the FCA that sets the standards. So, you dont need to be concerned about which body they use. All bodies will issue the IFA with an SPS. A statement of professional standing. That is a regulatory requirement. So, you could ask to see that. Personally, no-one has ever asked to see mine. If the adviser is on the FCA register, then that is usually good enough.



Yes. You get access to the FOS and increased FSCS protection (not in value but the areas it covers in paying out). That is not a major issue in most areas but has been seen multiple times in the last decade. The FOS and the FSCS both tend to award against the adviser if non-mainstream options go on to fail whereas DIY investors in those areas get reduced or no protection. Basically, if a product or investment fails, use of an adviser gives you a second avenue to pursue in getting your money back. If mainstream is used then the chance of failures are low.

Hi thanks for this. I have been following Paul Lewis for sometime now on twitter and he very pro IFA so I have am just trying to find out as much as possible.

colsten

RobStaffs wrote: »

Is there any protection for people who choose to go with an IFA in terms of advice when it comes to managing financial affairs?

dunstonh wrote: »

Yes. You get access to the FOS and increased FSCS protection (not in value but the areas it covers in paying out).

RobStaffs, you do not need to have a Financial Advisor to get access to the FOS or to FSCS protection. You get the same protection without paying an IFA.

I am quite shocked that dunstonh, a poster known for his professionalism, would have you believe there is anything special in terms of access to the FOS or the FSCS protection if you have a Financial Advisor. There must be a misunderstanding somewhere along the lines.

dunstonh

RobStaffs wrote: »

Hi thanks for this. I have been following Paul Lewis for sometime now on twitter and he very pro IFA so I have am just trying to find out as much as possible.

Funny you say that as Paul Lewis writes for a publication aimed at IFAs and he is quite confrontational against them. Although the writing style appears to be click bait. Maybe he paid by article responses!

RobStaffs, you do not need to have a Financial Advisor to get access to the FOS or to FSCS protection. You get the same protection without paying an IFA.

I am quite shocked that dunstonh, a poster known for his professionalism, would have you believe there is anything special in terms of access to the FOS or the FSCS protection if you have a Financial Advisor. There must be a misunderstanding somewhere along the lines.

There is a difference in the coverage between DIY and using an adviser. If you DIY, the only things the FOS can really be used for are issues over admin related things with the product provider. Whereas with an adviser you can use the FOS over poor advice and poor suitability as well.

The FOS have also been upholding cases where non-regulated products/investments have been arranged by advisers but not if they were arranged without an adviser. The FSCS have also been paying out significant sums in this area too on advised cases but nothing on non-advised. If mainstream is used, this is not likely be an issue (as I said previously).

Edit with an example: The individual is responsible for what they buy in a SIPP. If they buy say ETFs or ITs above their risk profile and capacity for loss and suffer losses that cause them to panic and pull out, then they suffer the loss and cant complain about it. If those same investments were put in place under advice through the adviser then the adviser takes the responsibility and the investor can complain and use the FOS. If the FOS agree that it was unsuitable, they will award compensation.