Check up on the experts

Most of us would welcome some expert help in sorting out our finances, but worry about picking an adviser who turns out to be incompetent or dishonest. Satisfying yourself on a few basic points should help you avoid falling into the clutches of such an individual.

First, be clear just what kind of advice is being given. Tied agents offer the products of just one company and traditionally seek introductions through friends and family. It may be that the company's products fit your needs, and you may prefer to stick to someone you know and trust. But prices may not be the most competitive, and the investment performance may not be the best available.

If you want a wide choice, go to an independent financial adviser. IFA Promotion (0117 9711177) can give you a free list of three IFAs in your area.

The next step is to make appointments and go along for a financial factfind. This is a series of questions designed to tell the adviser everything he needs to know about your finances. Most IFAs will offer the service for free. Don't be blinded by science. A good adviser should be able to explain in plain English why he is recommending a particular course of action.

In deciding whether to use an adviser, tied or independent, ask the following questions.

Who authorises them? It is illegal to give investment advice unless authorised by an approved regulator. The main body for IFAs is the Personal Investment Authority; tied agents are responsible to their host offices, which in turn are accountable for their agents' behaviour to the PIA. It may also be worth asking whether the adviser has had any complaints upheld against him by his regulator.

What are their areas of expertise? Some big firms will advise on anything from mortgages to tax planning and from pensions to overseas investment. But many smaller firms are limited to, say, life insurance and pensions. Make sure the adviser's expertise matches what you want.

How long have they been advisers? Check that your adviser has a track record in your area of interest. If you can find one who has proved himself with friends or business contacts, so much the better.

How will your interests be protected? In the case of PIA-registered advisers, you have the safety net of the Investors Compensation Scheme. This provides compensation of up to pounds 48,000 per investor if you have a claim on an adviser that he cannot meet. For a free booklet explaining how the ICS works, call 0171 628 8820.

How are they paid? The vast majority of IFAs are still paid by commission, which may create the temptation to sell you whichever product earns them the most, rather than the one that is best for you. Tied agents are paid through the charges deducted from your policy or savings plan, so they have an interest in selling as much as possible.

A third option is the small but growing number of IFAs who charge an hourly fee. They should redirect the commission they would otherwise earn into your savings. You may pay up to pounds 100 an hour for fee-based advice, but at least there should be less of a vested interest in selling you something.

When will you see them again? Most reputable advisers will want to review your finances periodically and in some detail to make sure your circumstances have not changed and that you are still happy with what you've got. Typically, this will happen about once a year.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific