In this lesson you will learn 💸
- What the two different types of financial advice providers are
- How to find out about the qualifications and reputation of any given advisor
- What the differences between big vs. small advice firms are
There are two types of financial advisors
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Independent Financial Advisors: Independent advisors can advice you on products from any provider throughout the market. They can sell you those products too. They should be able to suggest solutions that are just right for your circumstances and preferences.
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Restricted Financial Advisors: Restricted advisors can only recommend certain products or providers - if they haven't clearly told you what the restrictions are, make sure you ask for more information.
Tip 📌
It’s worth trying to go with a recommendation from friends or family who have successfully used the advisor. If not, it can help to draw up a shortlist of at least three and speak to them all, to get a feel for who you will get on best with.
Make sure they're qualified and registered
All financial advisers in the UK should be registered with the UK Financial Conduct Authority (FCA) and have two qualifications:
- Qualifications and Credit Framework (QCF) Level 4 (or above) – level 4 is the equivalent of the first year of a degree
- A Statement of Professional Standing (SPS) for the current year. This means they have signed up to a code of ethics and have at least 35 hours of professional training each year. Check that the SPS is up to date.
Qualifications and Credit Framework (QCF)
The QCF qualification should cover:
- regulation and ethics
- investment principles and risk
- personal taxation
- pensions and retirement planning
- financial protection (Level 3)
- financial planning
What does FCA registered mean?
Being FCA registered means you can complain to the Financial Ombudsman Service and possibly claim compensation if you get bad advice. So don’t be afraid to ask about that, or their qualifications and SPS.
You can check whether an IFA is FCA registered at the Financial Services Register.
Big or small?
A big firm is more likely to be able to ride out ups and downs in the market and economic conditions. They will also have more resources for detecting and stopping fraud and protecting your data. But will you get as personal a service as with a local financial advisor who can take a bit more time to understand you? If you prefer a small firm, you should ask how they protect their customers’ data and money, and make sure you’ll be able to get help whenever you need it.
Check out their reputation
Check the financial strength, history and reputation of the bank or institution. Good advisers will list their qualifications and credentials on their website or in their credentials. You can also check the quality of an adviser’s company by looking at the grades rating agencies have given them.
In addition to the FCA register, there are a few other resources to help you find or check out an adviser:
- Society for Later Life Advisers
- Personal Finance Society
- Standards International for advisers with ISO 22222 and BS 8577 qualifications
- Unbiased.co.uk
- Vouchedfor.co.uk
- The Money Advice Service
Your action 📝
How about drawing up a short list of suitable potential advisors for you by checking in with friends, colleagues and relatives, or doing some desktop research, and then assess each one of them in more detail by phoning them up and ideally also meeting them to find the right one for you.