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What to look for in an IFA

by anonymous

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When choosing to use the services of any professional you always want to engage with the best one for your circumstances. This is really important when choosing who to advise you on your finances. Whilst ultimately it may depend on who you feel you have the best rapport with. Ensuring that you're choosing from the most appropriate ones you need to check out a few things first. Regulations are ever changing in the Financial Services Industry. One of the latest is as a result of the Financial Services Authority (FSA) Retail Distribution Review (RDR). Part of this means that as of 1st January 2013 all financial advisers will have to have a Statement of Professional Standing (SPS), so check if the adviser that you are talking to has obtained this. If an adviser already has their SPS in place it shows that they are ahead of the game so rather than waiting for the deadline they have planned in advance to get where they need to be. This not only shows that they are prepared but also gives you an indication of how they work in general and also the qualifications already attained. You want an adviser that demonstrates foresight as this shows he or she is likely to deal with your finances in the same way. To obtain their SPS an adviser will have to have achieved a level 4 qualification so they will have a good general knowledge of financial planning. This will be suitable unless you want advice on a more specialised topic such as Care Provision for the Elderly or advice on a Defined Benefit pension scheme. Better to have an adviser that can give you advice on the whole of your financial situation and call in an expert on specific parts rather than use an ‘expert’ who is not able to consider the whole of your financial needs initially. Having found a well rounded SPS holding adviser, check that they are truly independent and can offer a whole of market proposition; in other words that they are not limited to panels of companies or funds within companies. You want someone who can review every company}, type of scheme and every fund/stock option in the market place and will choose the most appropriate for you from this wide array. Ask about costs. Although the precise costs will depend on the complexity of your situation, an adviser should be able to give you a pretty good indication of their initial and any ongoing charges. Another feature of the RDR is that payment by commission will no longer be available; advisers have to tell you what they charge and the service that is being provided for the charge. This does not mean that you will always have to pay an invoice as it is still possible for the charge to be paid for from the product you are buying but you will know the exact amounts before you agree to anything, rather than a charge being hidden within the vast amounts of paper work that advice often involves. There is no such thing as free advice. Providing a professional, well qualified, ethical financial planning service is a costly business these days so be ready to pay a charge if you want a good independent financial adviser to prepare you a report with recommendations, in the same way as you would your solicitor or an accountant. Most advisers will offer you an initial meeting without charge so that you can check out the things already mentioned and see whether the two of you are going to get along. If you decide to proceed then the adviser will want to get to know as much as possible about your financial affairs. This should be the case even if you have gone with the intention of dealing with one specific financial area in mind, such as a pension. An adviser who is happy to just ‘take an order’ rather than delving further should be walked away from. Your financial affairs are inter linked and if not considered as a whole there is a danger that one piece of good planning, taken on its own, could have a negative impact on another area such as your income tax position, which is why a well rounded view is necessary. The information gathered will not only include facts about your current circumstances, existing plans and what you want to achieve both now and in the future, but also how you feel about certain aspects of your money. If you require any type of savings or investment advice there should be a discussion of your attitude to risk. This will include the need for emergency funds, your timescale and how you feel about potential loss. You will probably be asked to complete a questionnaire which will provide a good insight, but this should always be backed up with discussion. If you are told rather than asked about your attitude to investment risk then the adviser is not for you. Listen to how the adviser talks to you. Do they use language that you understand? Do they encourage you to ask questions to check your understanding? If not, then again walk away. You need someone who will help you understand your finances, this may be over time but a good adviser will want to educate you where necessary so that you get a good idea of why they are recommending a particular course of action and also so that you will recognise when there are changes in your circumstances that require you to inform your adviser. Finally, a good adviser will tell you what happens next. In most circumstances they will need to consider the information that you have provided, carry out research and want to put together a report with recommendations. Sensibly this report should be sent to you so that you have time to read and consider it before meeting again to discuss the contents and deciding on your next course of action. Remember that a good independent financial adviser will want to develop a relationship with you so that you feel comfortable providing them with lots of highly private information. If you do not feel comfortable then look for someone that does make you feel so. Zanne Marchmont at Savvy Finacial Planning is a financial adviser in Dorset in the UK and reminds us: "A good adviser is worth their weight in gold and will provide you with many years of prudent recommendations that will enable you to achieve your financial goals as efficiently as possible". Read more about financial planning at http://savvyfp.co.uk.

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