Chartered Financial Planners

4 Steps for Choosing a Financial Advisor

Posted By on January 19th, 2021 in Blog, Financial Advisor

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Many years ago, financial advisers had some bad press. There were scandals involving pensions, investments and commission driven products such as PPI being mis-sold, and so many were left sceptical about approaching a financial adviser. However, there were tougher standards introduced in 2013 which forced practitioners to hold much higher qualifications and commission driven sales were also banned, that being said it can still be a confusing task trying to choose a financial adviser, so, where do you begin.

Step 1: Do you need a financial adviser?

Carefully think about what help you need, what you can afford and what you value. Not everyone needs professional advice, you might just need some guidance on debt management or budgeting. If that is the case you can find lots of free sources online such as the Money Advice Service or Citizens Advice Bureau. For most people the only things you need to worry about are paying off debt, building some cash savings, paying off your mortgage and joining a pensions scheme. If you have large amounts of savings, high earnings and lots of investments then you might need a financial advisor.

Step 2: Decide which type of service you want?

If you do require regulated financial advice do you need this for a single issue or do you need a comprehensive, ongoing service. A lot of firms are keen to provide, and charge for, an ongoing advice service. But you might not need this, you might just want an initial plan and to return every few years to make sure you are on track. Make sure you are only paying a fee you are comfortable with and for services that you really need.

Step 3: Independent or Restricted Advice?

There are two main categories of financial advisers, independent and restricted. Restricted advisers can only recommend certain types of products, or products from a limited number of providers. In independent adviser, in contrast, can recommend their pick of investment products from across the market.

Step 4: Choose which level of advice you need.

Obviously the more your financial adviser does for you the more you will need to pay. At the expensive end of the spectrum, a wealth manager’s clients will have investable assets of more than £1 million and will offer anything from divorce management to tax planning. At the other end of the spectrum “robo advice” is becoming more popular, these are cheap online platforms that assess your needs on a questionnaire and recommend generic suggestions for you to browse through independently.

Most importantly make sure you find a financial adviser that you think are offering you goof value for money, no matter what price you are paying, and also that they are someone that you feel comfortable with, as money can often be a sensitive subject to discuss.

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