How to find a financial advisor

Financial planning can be a tricky business, and from savings and investments to pensions and life insurance policies, many of us will turn to a financial advisor at some point in our lives. But when it's your money involved, you need to know that you're getting the best advice from someone you trust. Here's how to find the right advisor, and what you can expect to pay.

What advice?
There are two types of professional financial advisers - independent and restricted. The former is able to offer advice on a full range of products, such as investments, from a full range of the providers on the market. They will make a comprehensive analysis of the products available, and recommend the most suitable for your circumstances, without influence from any outside sources.

A restricted advisor may specialise in certain types of products, or be limited by the number of providers it can recommend. Both categories should be authorised and regulated by the Financial Conduct Authority, holding the relevant qualifications, and adhere to a strict code of ethics, as well as keep up to date with market developments.

Finding an advisor
The first thing you should do when looking for an advisor is to check their credentials. If they are not approved by the FCA, you will have no right to compensation if you are offered bad advice, so check that they are listed on the FCA register. It is also important to check their level of qualifications, which should be level 4 or above of the National Qualifications and Credit Framework. They should also hold a Statement of Professional Standing. Always check what level of qualification they hold, and if in any doubt, check directly with the body named on their paperwork.

If you're unsure where to start your search, try online organisations such as Unbiased, Find an Adviser or Wayfinder from the Institute of Financial Planning.

Compare costs
Since 2013, financial advisors are now no longer able to accept commission from providers, which means you can be assured that they are not influenced when they recommend products. However, instead they must charge an upfront fee for advice. While that may be off-putting for many, the upside is that you know exactly how much you will have to pay, and advisors must advise you before you start. Fees do vary according to location and qualifications, so it is worth shopping around. You may also be able to negotiate on price if you know exactly what advice you require.

Weighing up the cost
According to advice website Unbiased, a full review of your finances with a financial advisor will set you back as much as £500, with any further advice charged at around £150 an hour. Advice on pensions ahead of retirement will also set you back around £500, while more complex advice, such as converting pensions into a lump sum or annuity, or setting up an investment strategy for an inheritance, could cost anywhere from £700 to £2,000.

That might seem like a lot of money to pay, but what you need to bear in mind is how much that advice could make in returns. For instance, if an advisor recommends an investment strategy that makes you tens of thousands over its lifetime, the upfront cost would certainly seem good value for money.
On the other hand, simpler financial products such as ISAs can be easily researched online, and you may well save yourself a sizeable lump sum by doing a little of the hard work yourself. If you are confident about dealing with your own finances, you could even start DIY investing with the help of firms such as Fidelity, whose website includes a quiz that will direct you to a suitable fund, or fund supermarkets such as Hargreaves Lansdown or Bestinvest.

For any complex needs though, you are best to take the initial hit and pay an advisor - it could mean you're quids in long term.

Have you taken advice from an IFA that proved worth the fee, or do you prefer to take the DIY route? Leave your comments below...
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