Financial advisor advising?

bendy

Hi all, I know there's a few professional advisors lurking in these forums and I'm hoping to pick your brains...

I'm quite happy with my current work (IT consultancy) but for the last year I've found myself reading finance books 'for fun' and am thinking that I should may be read towards a qualification if I'm going to keep reading this stuff anyway. I've now bought books to take the Certificate of Financial Planning in my spare time as ideally I'd like to carry on with the consultancy work rather than take a trainee financial advisor role.

My problem is that being able to advise at a personal level with whole of market products really appeals but I don't think I could bring myself to sell fixed products if I didn't think it was in the persons best interest. Is there anyway I can get into Financial Advising without having to go through a sales stage of pushing certain products?

Thanks in advance for your help and Merry Christmas to you all!

Ben

dunstonh

My problem is that being able to advise at a personal level with whole of market products really appeals but I don't think I could bring myself to sell fixed products if I didn't think it was in the persons best interest

Age old dilemma.

Is there anyway I can get into Financial Advising without having to go through a sales stage of pushing certain products?

You can go straight to IFA without having to serve time as a tied agent. However, it is not an easy route. It will also not be cheap and if the FSA follow through with their proposals, the requirements for qualifications will be 4-5 exams higher for IFAs than tied agents from 2009.

Also, passing the exams doesnt allow you to give advice and you cannot sell or advise on products without having FSA authorisation. You wont be able to get this as a self employed IFA without experience and most networks (support companies for IFAs) wont consider you unless you have achieved competent adviser status and had at least 12 months experience.

This means becoming attached to an existing firm. If its IFA, most of these will only pay you on business you write and expect them to take upto 70% of the money themselves to begin with. Some will also have a monthly fee for you to pay (often around the £200-£300 mark).

This is why most start out as tied agents as the employer covers all the costs and you get paid a basic whilst you are being trained. Plus, you are not financially liable for the advice you give as an employee (as a self employed IFA you would be).

Its not really practical to be a part time IFA. The running costs are far too high if you want to do a decent job. My software costs alone come to over £10k a year. The FSA/FSCS/FOS levies are over £3000 a year. PI cover is going to be around £1200.

bendy

Sorry for the slow thanks but I've been away for Christmas/New Year...so thank you for that info! Not quite what I was hoping to hear but good to know it's possible to do all the same.

Could you give me any more detail on what's involved for being a tied agent? My 'phobia' is that I did cold-call sales about 10 years ago and found it unrewarding just trying to sweet talk people round into buying stuff (water pumps of all things) they usually didn't even want...this is what I'm imagining tied financial advising to be like so if I've got it totally wrong I'd love to be set straight on this.

Happy new year!

Ben

dunstonh

Could you give me any more detail on what's involved for being a tied agent?

Nowadays that typically means working for a bank as part of their salesforce. A few insurers have a small number of tied agents but most have got rid of them.

Tied agents are more limited in what advice they can give compared to an IFA. They not only have a lower product range but you can also forget portfolio planning and other more specialist advice. Tied agents are not allowed to recommend investment funds. IFAs have to. Most tied salesforces are not authorised to recommend cancellation of products. They arent allowed to comment on the suitability or quality of other provider's products other than generically (i.e. It is a life assurance). Charges will be much higher, product range will be simple.

Worst of all though from an employment point of view its saleforce. Targets, incentives, cold calling, pressure from sales managers and knowing that you arent giving best advice.

Most IFAs have been there as "doing time" as a tied agent is the typical career path. However, you wont find many that would do it by choice. Although there are some that like a sales environment and some do earn more as being an IFA is harder than being a tied agent. You need to have a greater knowledge and understanding as an IFA and many tied agents who have become IFAs have struggled with the increase in knowledge that they need to succeed. Some have gone back to being a tied agent as that was their comfort zone (and perhaps the employer spoon fed them appointments and customers).

You couldnt pay me double what I earn currently to go back to being a tied agent. However, it is a good grounding in the road to becoming an IFA. Doing 18 months as a tied agent wouldnt be fun but it would help you build up some clients, get your qualified and competent adviser status and have no personal liability for the advice you give so if you make mistakes, it wont come out of your pocket (unlike being a self employed IFA). And you will make mistakes. It takes about 18-24 months for a lot of the training to hit home and for you to understand what you are doing and why.

Retired_I.F.A.

The financially riskiest investment I know of is to become a lloyds name.
The financially riskiest job I know of is to be an I.F.A.

Why? Because both have unlimited liability.

A lloyds name can invest effectively as an insurance underwriter, say £100,000 and lose millions.

An I.F.A. can give good advice, find later the regulators opinion is different and be fined thousands even lose all he has even if he's 99 and gave the advice 30 yeas ago.

As I said elsewhere to a poster enquiring about becoming an I.F.A. :

Go flip burgers at Mc Donalds, it has a brighter future.

Willman_Rodders

I'm quite happy with my current work (IT consultancy) but ...

My advice then... stick with it.

I too was a fully trained IFA several years ago - though I use fully trained loosely here. Like many in the sector I started as a tied adviser; I'd previously worked for 20 years in banking and so I thought I knew sufficient to get me going. I was in for a shock. A steep learning curve commenced once I joined the sector as a tied adviser.

Yes I passed FPC papers 1, 2 and 3 and moved into being an IFA; the learning curve I had experienced as a tied adviser was nothing to the one that followed. Above FPC 1,2 & 3 there was a whole range of higher qualifications. Worse though was that whilst the company I worked for initially as a tied adviser supplied some leads, now as a self employed IFA I now had to find all my own. (And now making cold calls on the phone runs the risk of breaching all sorts of rules - so this source of business has gone).

I struggled on for a number of years, but each year I realised that there was yet more to learn (and so studying continued). As I got older I found that whilst there was more to learn my ability to retain what I already knew became increasingly more difficult.

Since my time in financial services I understand from former colleagues the costs have escalated; dunstonh's comments confirm this.

Now I deal with a number of IFAs and tied agents as introducers to my business; those successful IFAs who had an established business say 10 years ago continue to enjoy the benefits of having such a business. Very few new recruits are successful - unless they are very, very lucky and are given an established business.

One final point. Just prior to being made redundant by my banking employer they moved me to an IT department; my interests at the time were computer programming (amonst other things) Like you - with financial services - I was reading a number of books on the topic and enjoyed dabbling. What a difference the new working envireonment was; working on the PC day in, day out was not the same as doing it when I wanted to. I lost the pleasure of programming within about two weeks of moving to the department - so not only had I lost my banking career (which I was quite happy with) I also lost the enjoyment from my hobby.

I am with dunstonh here; stick with what you enjoy - look for new career paths at work and enjoy relaxing in the evening reading up on finacial advice. You can always share your new knowledge here on this site - its cheaper and [as Retired I.F.A point out] a lot less risky.