Money matters can often be complicated, and with the financial landscape constantly changing it can be hard to keep up to speed – especially when it comes to areas such as pensions, investments and tax planning, and buying property.
This is where a financial adviser can come into play. They can guide borrowers through the mortgage maze, support savers in sorting out their pensions, and help investors navigate their way through turbulent times.
They can also help you set personal goals – and put together long-term plans for you. Here, Telegraph Money explains what financial advisers do, and how to find a good one.
A financial adviser is a professional who can offer essential guidance for many personal finance topics.
Karen Barrett, chief executive and founder of financial adviser search tool Unbiased.co.uk, said: “It’s always worth getting qualified financial advice for complex areas, such as retirement and estate planning, accessing or transferring pensions, investing, equity release and long-term care.”
An adviser looks at your individual circumstances and decides the right course of action.
Ms Barrett added: “They will also help you understand your tax obligations and advise you on ways to legally reduce your tax liability.”
If you’re not quite sure what decisions to take, an adviser can guide you in the right direction.
There are two main types: restricted and independent.
- A restricted financial adviser will offer advice on a selection of products from a limited number of providers – or just a single company.
- An independent adviser can advise on all the products across the whole of the market.
Whether an adviser is restricted or looks at the whole of the market should not impact the quality of the advice given. Both types should be regulated by the Financial Conduct Authority.
There are also advisers with different areas of focus, such as:
- Mortgage brokers are experts in home loans, whether you’re a first-time buyer, moving home, or remortgaging.
- Protection advisers specialise in complex insurance products, such as critical illness cover, or income protection.
- Equity release advisers help with releasing equity from your home.
Other types:
- Financial planners typically focus on developing comprehensive personal plans to achieve financial goals.
- Financial coaches won’t recommend specific products, but can help you understand your finances and work with your money more effectively.
Finally, don’t forget to check out free sources of support and information, such as the Money Helper website – as well as organisations such as StepChange and Citizens Advice.
- Check out directories or platforms – These are sites such as Unbiased.co.uk and Vouchedfor.co.uk. Unbiased matches you up with a list of trusted advisers who could be most suitable. VouchedFor relies on reviews.
- Get specific – See if you can tailor your search by adding specified criteria such as region, or subject specialty, such as someone well qualified in tax, mortgages, investing or pensions. Note that you might even be able to specify a female adviser if you feel you’d be more comfortable with that.
- Seek recommendations – As well as doing your own research, ask friends, family and colleagues. Personal recommendations can go a long way. Just take the time to read reviews from other clients.
- Do your due diligence – If you’re not sure if a financial advice firm you’re speaking to is legitimate, check if they’re regulated by the FCA. You can do this by searching for the firm or individual on the Financial Services Register.
- Get a trial – Ask about getting an initial free consultation online or in-person to find out if the financial adviser can access the whole market, their qualifications and experience, and to discuss what you need help with. Use this to decide if they are right for you.
- First of all, you need to choose the right type of adviser. See if the adviser specialises in the subject area where you’re looking for help – such as mortgages, protection or tax.
- Find out about the adviser’s qualifications. If he or she is providing advice on pensions or investments, a Level 4 Diploma in Financial Planning (or above) is required.
- Ask about their experience. You’ll probably want someone with a wealth of experience in the area where you’re seeking help.
- Find out how much the cost is likely to be – as you need to ensure this fits with your budget. Note that a financial adviser must tell you how much they charge before you are taken on as a client. While you may not be given an exact figure, you should receive a good estimate.
- Try and ascertain how the adviser is going to add value. This could be tangible value, such as money saved in charges or taxes. Or it could be “perceived value” in terms of peace of mind.
- Work out if you can build a rapport with them. “Trust is everything,” said Alex Whitson from VouchedFor.co.uk. “Speaking frankly about your finances and goals can be difficult and you need to choose someone you can trust. Use the free first meeting to ask questions, and if the relationship isn’t right, be prepared to walk away.”
- If you’re able to, try to meet a selection of advisers before choosing the right one for you. Meet them face-to-face for the initial meeting if you can. You’ll know when you’ve found a good fit.
When should I see a financial adviser?
You should look to speak to a qualified financial adviser for complex areas of your finances.
Mr Whitson said: “A trusted adviser can be invaluable at many different points in life, whether you’re buying your first home, want protection for your family, or are thinking about retirement.”
It can be helpful at any stage where you’re struggling to make decisions on your own.
“For most people, the earlier in life they engage with an adviser, the greater the chance of them being able to achieve their financial goals,” Mr Whitson added.
What should I ask a financial adviser?
Some questions you might want to consider:
