Financial planning: Get advice on putting your money to work
Saturday 06 December 1997
Choosing the right investments can mean the difference between a mediocre and a good return on your money, while a review of your insurance and pension provisions could save you thousands of pounds over the long term.
An independent financial adviser (IFA) can review your overall financial situation and give you expert advice on making the right provisions for your financial security.
All financial advisers seek to give good advice but only IFAs can give "best advice". This is because IFAs scour the whole market, looking for the best financial products most suitable for your needs, unlike tied agents and appointed company representatives, who can only advise on and sell products from the company they work for.
Being able to choose from the whole market tends to be better than only being offered one company's products. No company will always have the best products or best performing funds in every investment sector. And few companies offer the full range of investments and savings products available on the market. With an IFA, not only do you know you are getting expert advice, but it also is unbiased. Of course, this advice does not come for free.
IFAs make their money in one of two ways. Either you can pay a fee or they can receive commission from the financial products they sell you.
IFAs working on a fee basis charge from pounds 50 an hour. The rate may vary depending on the type of advice you want. This may seem steep, but other professionals, such as accountants and solicitors, can charge more.
Alternatively, your IFA may be commission-based.You will not have to pay any money up-front for the advice you receive, but you will pay it indirectly. Many financial companies pay commission to advisers when they sell one of their products, and this is added to the cost of the financial product you buy. If your IFA is fee-based, he or she can ask for no commission to be charged or paid. Alternatively, the IFA can split the commission with you.
By law, your IFA has to tell you how much commission he or she is being paid. Commission payments vary between 1 per cent and 5 per cent of the amount you invest, depending on the product. Beware a sting in the tail: commission on some regular-premium products is based on a calculation of the premiums you are expected to pay over the lifetime of the product. This is typically an up-front payment, which means most of your first year's premiums will go in commission.
IFAs have to hold professional qualifications. The basic qualification is the Financial Planning Certificate, but some IFAs go on to take more advanced exams and will specialise in a particular area such as investments, tax planning or mortgage business.
Choosing an IFA you are happy with can take time, bearing in mind that you want to deal with someone you are comfortable with and who you can trust. Recommendations from friends, a solicitor or an accountant can be a good starting point.
"You may even find your solicitor or accountant is able to help you himself," says Anne-Marie Martin, acting chief executive of IFA Promotion (IFAP), a body which promotes financial advice.
"Some solicitors and accountants are qualified to give independent financial advice. If they are not qualified themselves, they may have an IFA arm or someone in the company who is qualified and deals specifically with financial planning."
To check if your solicitor or accountant is authorised to offer independent financial advice, you can call the Financial Services Authority central register on 0171-929 3652.
If you are unable to find an IFA via a recommendation, you can call the IFAP hotline on 0117-971 1177 for details of three IFAs in your area. IFAP recommends talking to at least a couple of IFAs before deciding which one to select. Most firms are happy to give potential clients the names of two of their clients.
When you meet an IFA, he or she should carry out an in- depth fact-find into yourfinancial arrangements. This enables them to build up an overall picture of your financial affairs. Your IFA can review your arrangements. It could be that some of your investments are no longer performing particularly well and you could do more with your money elsewhere.
IFAP has produced a guide on the types of financial advice that are available, as well as a factsheet on how your IFA is paid. For copies, contact the IFAP hotline on 0117-971 1177.
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The air strikes were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...