Pensions & Investments

Unless you are qualified in insurance, banking or personal finance the chances are that you are looking for unbiased, independent advice regarding the everyday decisions you need to make about your money. Even if you are qualified, it’s a good idea to chat to someone that actually specialises in what you need.

Unfortunately, in today’s marketplace you are unlikely to find advice that is truly independent, practical and affordable!

Before you get too despondent, I’m not saying that good advice is not out there, it is. What I am saying is that the current market environment, coupled with the current regulatory system, makes it, for practical purposes, nigh on impossible to find.

The main areas of need for most people are personal financial advice such as investments, pensions and life insurance with all its derivatives, Mortgages and General Insurance, such as house, car or business.  I’ll cover Mortgage and Insurance in another blog and will start with personal financial advice here.

An Independent Financial Adviser should normally be your first stop for all your personal financial needs, pensions, investments, life insurance etc. Until a few years ago an IFA could be paid on commission according to what they sold. In regard to Life Insurance without any investment element, they still can be. For everything else they will charge a fee.  Advice is expensive, and that is due, in the main, to the cost of running a practice. Staff, regulatory and training costs have all got to be covered, along with expenses such as rent, rates and utilities, just like any other business. In theory, you should be able to go to an IFA and ask for advice on putting £50 per month somewhere or tuck away £10,000 for a rainy day. The reality is that the fee they will ask for to do that business would make it financially pointless even to ask. To be cost effective for the suitably qualified IFA, a typical minimum investment of £100,000 is, I am saddened to say, a reasonable stance.

Before getting ahead of myself, back to basics! Firstly, is your adviser, or proposed adviser, actually independent? And, for your particular need, does it matter?  It is not as daft a question as it appears. There are two types of Financial Adviser; Independent and Restricted. It should be straightforward; an Independent Financial Adviser can go to any provider and research on your behalf the most suitable product for your circumstances, and then recommend it. A Restricted adviser, should do the same but from a limited pool of products and providers.  As you may have already guessed, it is not quite that straightforward. An Independent Financial Adviser may specialise in a certain type of pension or investment, yet under the rules they may help you with products they don’t deal with that often. Equally, a Restricted adviser may be an absolute expert in the area that you need. It is wrong to assume that Independent is always best, although the odds would say that in the majority of cases they should be.

As with any professional or tradesman, the best way of finding an adviser is by recommendation. Asking a friend, colleague or relative about their experience with an adviser is probably the best way of getting honest feedback about them. Getting such a recommendation though doesn’t excuse them from being subject to the type of questions we will be covering in later blogs. If you cannot get a recommendation then there are a couple of things you can do. www.unbiased.co.uk is the largest IFA search organisation on the internet. It is also very easy to use, just put in your postcode and a list of local advisers will be displayed. There is a “refine” button which will narrow the results to the specific area of advice you need. Don’t just go with the first on the list, select two or preferably three to start with. If they have “Chartered Financial Planner” in their title, all the better as that will indicate a greater level of qualification.

The Financial Conduct Authority, which is the industry regulator, has a directory of authorised firms which can be found here http://www.fca.org.uk/register Just put in the name of the company or individual into the search box and details of their authorisation will be shown.