Pick your money manager wisely
AS A nation, we are apparently more likely to seek professional advice on our hair, our gardens and our cars than on our personal finances. Yet with the growing number and complexity of products on offer, it is becoming more important for people to seek advice before they take a decision – particularly if their finances are already complicated enough.
There are some organisations such as the Pensions Advisory Service and the Consumer Financial Education Body, which all provide financial help on a range of products. But if your finances are more complicated and you want advice on your whole financial situation, then hiring an independent financial adviser (IFA) can be worthwhile.
But how do you go about finding one that meets your needs? There are thousands of IFAs
registered in the UK, so looking for one can be a daunting task. To whittle it down, there are a number of things you should consider.
First, seek personal recommendations. These can be both a reassuring and a successful
route to selecting an adviser but bear in mind that what suited a friend or colleague may not be appropriate for your circumstances. If you can’t get such recommendations, then there are plenty of online search sites such as unbiased.co.uk, the Association of Independent Financial Advisers (www.aifa.net) or searchifa.co.uk. You should ask IFAs to provide you with details of existing customers who are happy to talk to you and you should also check that they are registered with the Financial Services Authority (FSA).
Second, consider the location. Despite the rise of the internet, most people still like to meet their IFAs, at least initially. This is understandable, given that you have to be able to trust them with your money and be able to communicate with them. You should also consider whether you want your IFA to be close to your work or to your home. If you choose to go down the online route, then it might be safer to choose a more well-known brand that has been strongly recommended.
Third, check the IFA’s qualifications. Some are specialists in certain areas such as pensions or investments so if you have certain requirements, then look for an IFA that has the relevant qualifications.
There are certain criteria that a good IFA should fulfil. Karen Barrett, chief executive of unbiased.co.uk, says that she would expect an IFA to be able to tell you clearly what they do and the type of clients that they have. “They should also stress that they are an independent financial adviser and that they offer the whole range of markets. If they don’t, then you should look elsewhere,” she says.
An IFA needs to be able to explain how products are structured and, more importantly, what they are doing for you given the other financial arrangements that you have in place.
You should also expect a quick review of your situation from your IFA at least once a year. After the relationship has been established, it is then up to the client how often they want updates, says Barrett. You should also seek advice if you experience a life-changing event such as getting married, having a child or buying a house.
Getting advice on your finances is important but it is equally important to choose the right adviser.