Independant Financial Advice

mattih5

Hi,

I'm not sure I have posted this in the right board as it doesn't seem to fit in any of the categories.

Basically I have been saving for quite a number of years now and have built up a nice tidy sum which resides mainly in ISAs, high interest accounts etc.

I'm 24 and would consider now to be a perfect opportunity to start putting some of my monthly savings into a pension. I don't have the benefit of a company scheme who match or anything like that so need advice really. I'd also like to be a little more adventurous with my money rather than sticking to ISAs etc.

How do I go about finding a independant financial advisor? Is there anything I should look out for? How do financial advisors charge for their service and is there an average rate?

Do they simply offer you solutions from a pack or do they do proper research into your individual circumstances?

Thanks,

Elaine_Wilson

I don't think you can beat a personal recommendation.

IFAs earn their money through commission or fees. It should be established at the outset how they are remunerated. Some will charge no fees but will keep all the commission on any products sold. Others will rebate commissions but charge an hourly rate. There are also deals to be done between these limits.

Personally I would probably tend towards paying the fees but this will not be the best choice for everyone.

Have you thought about going it alone? There are a number of very helpful and informed contributors on these forums. Try posting in the pensions board and see what response you get.

mattih5

Hi,

Thanks for your response. Yes I have thought about going it alone and have posted several questions on here before but it all confused me - this is the reason why I thought of seeing a IFA.

dunstonh

Personally I would probably tend towards paying the fees but this will not be the best choice for everyone.

There are more modern contracts where you can do a hybrid charging structure where you agree the fee but have it taken from the plan. With pensions, this can be ideal as effectively, you get tax relief on the fee therefore reducing it by 22%.

Charging by the hour on fee basis is not that common. Whilst virtually all IFAs will have this option, the more common fee basis is a fixed fee for a transaction. Although smaller transactions are still often better on commission basis.

How do I go about finding a independant financial advisor?

https://www.unbiased.co.uk is the database which you can search by postcode (do not filter by qualification as they is highly flawed. If you choose one qualification, it will only show those with that particular qualification and not those with an equal or higher one). Avoid salesforces (targets, sales managers and incentives dont go well with good advice). Smaller more local firms are often the best choice, especially those linked to a good network as you know they will tend to have the best deals and their work is sampled for quality.

Do they simply offer you solutions from a pack or do they do proper research into your individual circumstances?

IFAs are whole of market. They will research accordingly. Research is where the quality is and is probably one of the main differentiators between IFAs. You should ask to see the research if it is not shown to you.

ipri

Hi...have had IFA in the past ..didnt like the wholesale changes made to my finances...will have to see somebody soon to ask about retirement (imminent)..Im happy to pay for specific advice but dont like the idea that any policies/investment seem to have the ifa "attatched "..ie when policy matures they get % of policy value....they always seem to want to restructure the whole situation...cant they just advise on the requested area?

dunstonh

ie when policy matures they get % of policy value.

Since when? The only time this can occur is on pensions when you purchase an annuity with the same company. However, if you get a new IFA to do the work for you, they will be paid it instead. If the old IFA is no longer trading the company keep it from themselves. If you dont want an old IFA you no longer use to be paid then use a new IFA.

they always seem to want to restructure the whole situation

Whats wrong with that. Product charges have been getting lower and lower and if the switch saves you money and offers better features/terms then why wouldnt you want to switch? Pensions in particular have seen significant reductions in charges and a vast improvement in the investment options.

cant they just advise on the requested area?

Yes. However, unless you specify that, they will review all areas. That is in accordance with the FSA rules.

It appears you need an IFA that is better on the communication front. It helps to know why something is done and it appears you dont know why.