Will IFA's Always Have Your Best Interests at Heart

sandsy

Advisers have a regulatory responsibility to act in the best interests of their clients. Every time they give advice, they have to give advice which is suitable and they carry the liability for that piece of advice for a lifetime.

If, on complaint, an independent ombudsman considers that those requirements weren't met, the adviser has to pay redress to put the customer back in the position they would have been if the correct advice had been given.

Given that regulatory background, there's a pretty good incentive for advisers to give good advice. There's always going to be a few bad apples around. Trust your instinct, ask your adviser why they are recommending a specific course of action so that you can make him/her aware of anything that you think might be relevant to the advice which is given.

cfw1994

sandsy wrote: »

Advisers have a regulatory responsibility to act in the best interests of their clients. Every time they give advice, they have to give advice which is suitable and they carry the liability for that piece of advice for a lifetime.

If, on complaint, an independent ombudsman considers that those requirements weren't met, the adviser has to pay redress to put the customer back in the position they would have been if the correct advice had been given.

Given that regulatory background, there's a pretty good incentive for advisers to give good advice. There's always going to be a few bad apples around. Trust your instinct, ask your adviser why they are recommending a specific course of action so that you can make him/her aware of anything that you think might be relevant to the advice which is given.

Maybe I need to do a bigger search in this forum....but what advice would you have for finding a decent IFA?
I think it is fair to say most people would rather avoid the need for the future use of an ombudsman!

I've had people in the past involve in financial discussions, but have generally managed my own way.
...now as I approach later years, I almost certainly need some advice, but where to start?! I know friends with some, but either they aren't located close to me or I'm not too impressed with Thai approaches!!

dunstonh

but what advice would you have for finding a decent IFA?

Most are decent. IFAs account for the majority of transactions in many areas yet have one of the lowest ratios of complaints at the FOS and a low uphold rate. Even the FOS has commended IFAs in recent times for the quality of their file keeping and knowledge of their clients.

Part of the problem comes from many consumers not knowing the difference from an IFA and FA. Research many years ago found that over half of people seeing an FA thought they were seeing an IFA.

To be honest, common sense is all that is needed. Are the recommendations using mainstream options that are regulated? Are the recommendations described that you understand them and the reasoning behind them? You dont need to know the small detail but you should be able to understand enough.

If the recommendation is for biofuels, overseas property, student accommodation, storage pods, airport parking, forestry or other weird or unusual things then run a mile.

zagfles

sandsy wrote: »

Given that regulatory background, there's a pretty good incentive for advisers to give good advice. There's always going to be a few bad apples around. Trust your instinct, ask your adviser why they are recommending a specific course of action so that you can make him/her aware of anything that you think might be relevant to the advice which is given.

There's also the incentive to cover the backsides - ie give advice which is less likely to result in a claim, which isn't always the same thing as what's in the client's best interests. Eg see discussion here:
https://forums.moneysavingexpert.com/discussion/comment/71585576#Comment_71585576

GSP

So when annuity rates reach £700 for £10,000 in 10 years time, I can rely on my IFA to suggest buying an annuity from all the money left in flexi access drawdown, thus ending the relationship and their annual fee.

dunstonh

So when annuity rates reach £700 for £10,000 in 10 years time,

What makes you think that annuity rates will return to that level?

Mortality gain is never going to recover. People are living longer. You would need very high gilt yields and the economic situation that could see yields at that level would actually result in higher investment returns.

.... can rely on my IFA to suggest buying an annuity from all the money left in flexi access drawdown, thus ending the relationship and their annual fee.

Asked and answered already.

GSP

Yes we wish dunstonh for those rates. I was just using them as example if a product rate or metric became very attractive in future where IFA's would lose future fees as suggest a move into these would end their relationship.

bigadaj

GSP wrote: »

Yes we wish dunstonh for those rates. I was just using them as example if a product rate or metric became very attractive in future where IFA's would lose future fees as suggest a move into these would end their relationship.

It's a question that individuals need to ask themselves.

Ifas don't manage every aspect of ones financial life, state pension deferral was certainly a good option for many until the rule changes last year, and may still be for some, but wouldn't typically be recommended by most advisers as I understand it.

Property such as buy to let is also something they won't advise on, though may take into account in a wider financial context, for example.

atush

IFAs would arrange the annuity and be paid for that, so if there are ongoing meetings, then it might be recommended- IF you wanted a no risk option with no inheritance to partner or children.

GSP

I was just using annuities as an example atush. Would be the same question if any product became beneficial to move into or buy. If these did not incur ongoing annual fees, would the IFA recommend them.
It seems it will pay to keep an ear out in future of what the markets are doing. Things will change, not sure when, but appears you will have to do your own research and monitoring of what's out there and if its a good time to move into.