Choosing a financial adviser

When it comes to making big financial decisions, you don’t have to go it alone. Here are 5 things to consider when choosing a financial adviser.

Where can I find an adviser?

Personal recommendations can be a good way to find an adviser, so ask friends or relatives whether they’ve paid for advice they’re happy with.

If you can’t find an adviser through a personal recommendation, search for one online. Unbiased enables you to find advice from a choice of more than 24,000 independent financial advisers (IFAs), mortgage brokers, solicitors and accountants. They are all regulated by the Financial Conduct Authority.

Another website, VouchedFor, has 7,500 financial and legal professionals listed, with over 35,000 reviews from people who have used them.

How much does financial advice cost?

Since January 2013, advisers have had to charge fees for the advice they give, rather than receiving commission on the investments they sell. Advisers can, however, still accept commission for mortgage and insurance advice. Some advisers will charge you an hourly rate, whereas others might charge a fixed fee, or a percentage of your investments.

According to Unbiased, advice on a £200 a month pension contribution would typically cost £580, while an investment strategy for a £50,000 inheritance for a 50-year-old would cost around £1,500.

Before seeking any financial advice it is important to ask how much the adviser charges, and perhaps compare charges with other advisers. There shouldn’t be any fee for an initial consultation, but check before you proceed.

Clare Francis, Savings and Investing Expert at Barclays, says: 'There’s a lot of information and support available online, but if you aren’t confident about making a financial decision on your own, it’s well worth seeking advice, even if it seems like an expensive option now. Making the wrong decision now could potentially cost you a lot more in the long run.'

Is the investment adviser independent or restricted?

When consulting an investment adviser, it’s vital to understand whether they will be offering you independent or restricted advice. If an investment adviser is described as restricted, they can only recommend products from a certain number of providers, or only offer advice on certain areas.

If they’re independent, they can recommend products from the whole of the market. According to the MoneyHelper, an independent service launched by the government: 'To be called independent, an investment adviser must be able to offer a broad range of retail investment products and give consumers unbiased and unrestricted advice based on a comprehensive and fair analysis of the market.'

Clare Francis says: 'Unfortunately, quality of financial advice varies, so it’s worth doing some research to try and find someone who’s going to give you good, independent advice. Recommendations from friends and family can be helpful but, even then, find out a bit more about the adviser and what they specialise in.'

Are there different types of financial adviser?

Some advisers specialise in particular areas, such a pensions or investments, whereas others are all-rounders. If you want advice on only one area, then choosing a specialist is a good idea, but make sure you check their qualifications. Mortgage advisers, for example, must have specific mortgage qualifications.

Karen Barrett, Chief Executive of Unbiased, says: 'If you need broader financial advice, look for those who identify themselves as financial planners. Do make sure they are happy to deal with your level of income.'

Do I need ongoing advice?

You might want advice on a specific issue, such as whether a tracker mortgage or fixed-rate mortgage is the right choice for you, in which case you may only want one meeting with an adviser. However, it’s always a good idea to review your finances regularly, particularly as all our circumstances change over time.

For example, when you have children, your priority might be saving for school fees, but once their education is finished, your focus might change to ensuring you are financially prepared for retirement.

Clare Francis says: 'Make sure you understand exactly what you’re paying for. There are wide variations in the cost of financial advice, but levels of service also differ. For example, some advisors will include follow-up support such as an annual review or access to research in their fee, whereas with others the price will just cover the cost of a one-off meeting and the work involved resulting from that.'