How To Choose An IFA

If you have big decisions to make about your finances – e.g. investments or pensions – you will want to seek the help of a financial adviser.

There are basically three types of financial adviser, usually labelled as “tied”, “multi-tied” and independent.  It’s only the third kind, the Independent Financial Adviser, who has access to the whole range of products on the market, and so is most likely to find the product that best meets your needs.

So you know you need an Independent Financial Adviser (IFA).  But a more difficult question to answer is how to choose an IFA.  Getting the right advice is so crucial to the rest of your life, you really need to get this right.

There are a number of steps in the process of how to choose an IFA.

1. Find one near you.  Financial advice is very personal and really needs to be provided on a face-to-face basis.  So you need someone you can visit in person.  The best way to find someone locally is by personal recommendation, so ask round your friends and colleagues.  If you can’t find one this way, you can use a search website such as www.unbiased.co.uk or www.thisismoney.co.uk/find-an-adviser , where you can search by postcode.  You can also use the website of the Personal Finance Society at www.findanadviser.org, although this lists all financial advisers, not just IFAs.

2. When you have made a list of local IFAs, visit two or three and see if you get on well with them.  This is a necessary but not sufficient condition!  A personal rapport is important if you are going to feel comfortable discussing your private affairs with someone.  But remember that an adviser can be charming, friendly and personable without necessarily being a competent adviser!

3. When you make your introductory visit, ask the following questions:
• How long have you been registered? (preferably at least three years).
• Are you FSA (Financial Services Authority) authorised?  You can check this on the FSA website www.fsa.gov.uk .  Don’t under any circumstances deal with an adviser who is not FSA authorised.
• What are your qualifications?  All IFAs have to have the Financial Planning Certificate in order to be authorised by the FSA.  Ideally the adviser should also have the Advanced Financial Planning Certificate (AFPC).  This can consist of different specialisations.  If you want pensions advice, you should ensure the adviser has the G60 Certificate in Pensions as part of the AFPC.

4. You should also find out about charges. The IFA will either charge you an hourly fee, or will be fee-free, receiving payments via commission.  If you want to save money, of course you will prefer the commission method, although some feel that by paying fees you can be more confident that the recommendations will be unbiased.  You need to be clear about this before making the final choice of your IFA.

Of course this is all very time-consuming and you can skip all this by picking an Independent Financial Adviser at random from the Yellow Pages.  But why would you?  IFAs vary a lot, from the excellent to the poor.  Given the enormous importance to your life of the quality of the advice you get, you owe it to yourself to make every effort to find the best one.�