Finding the right financial advice at the right price
When you’re working flat-out to make money, where do you find the time to sew up your personal finances into a secure safety net that’ll properly protect you and your family?
A financial adviser can help you put that protection in place, making sure you’re saving and investing your money in the most tax-efficient ways, and with products that specifically match your needs.
A financial adviser will also let you set your financial priorities effectively, so you can protect your family should the worst happen, while still saving for a rainy day and planning for retirement.
It won’t come free, but research from Unbiased found that UK savers who take advice save, on average, £98 more every month and receive an additional income of £3,654 every year of their retirement, based on a pension pot of £100,000.
The same research also shows that a third of consumers (34%) who have bought a financial product without advice, have gone on to regret their decision and that many people struggle to order their personal finance needs appropriately.
So how do you go about finding a financial adviser who’s right for you and how much will it cost?
Finding a financial adviser
These websites require all of the firms they list to have the necessary qualifications and to work to the mandatory industry standards, as set out by the financial regulator.
Before you go online, it’s worth speaking to friends and family who might be able to give you a personal recommendation. Your employer may also have teamed up with a financial adviser, and if so, the HR department at work can give you contact details.
Getting the right type of advice
There are two different types of financial adviser: independent or restricted. An independent financial adviser will look at products from across the whole market, ensuring they can consider every option available before making a recommendation for your particular needs.
A restricted adviser works from a limited panel of product providers and so they can’t evaluate every option before making a recommendation.
But it’s not quite that simple. There are some restricted advisers that do work with product providers across the whole market; but only for a limited range of product types. For example, they might only give advice on pensions and so even though they select products from every provider, they are still classed as restricted.
If the advice you need falls within their specialist area, you’ll still get a recommendation from the entire market, but if you need advice in any areas outside of the adviser’s scope, then they won’t be able to make a complete recommendation.
Therefore, you need to work out exactly what kind of advice you want, before deciding on the type of adviser best-placed to give it to you.
How much will it cost?
Since the beginning of 2013, financial advisers working in the following areas cannot receive commission and have to charge a fee:
- Retirement income products
- General financial planning
But financial advisers working in other areas can still receive commission:
- Life insurance
- Critical illness
- Income protection insurance
- Equity release
It’s important that you establish how your financial adviser will charge you. If they charge a fee then it will be based on: an hourly rate, a set price for a specific piece of work, a percentage of the money you’re investing, or a monthly fee.
If they’re charging a monthly fee, then find out exactly what you’ll get for this, how often they’ll be in touch and what activity they’ll be carrying out on your behalf. Financial advisers who don’t provide an ongoing service, can’t charge an ongoing fee.
You should also make sure your financial adviser sets out the charges in writing before you start doing business with them.
Different firms will all have different charges in place, but Unbiased’s Cost of Advice guide will give you an idea of what to budget for.
A financial adviser will help you understand your options and let you arrange your personal finances in the most efficient and effective way for you and your family. They should also save you time and steer you clear of making any expensive mistakes through inexperience and lack of market knowledge.