Though there will most likely be significantly fewer independent financial advisers (IFAs) come 1 January 2013 because of the Retail Distribution Review (RDR), there are still a wide variety to choose from.
This can be confusing when you do not know what you are looking for. Here is a quick list of things to look out for when finding the right IFA for you.
- Make sure they have a Statement of Professional Standing.
- Make sure they are a Certified and/or Chartered Financial Planner.
- Make sure they specialise in the area of advice you need.
- Make sure they have an honest conversation about the fees they charge before you start.
As a basic guide that is pretty much it. Make sure they are allowed to advise, are highly qualified to do their job, charge reasonable fees for the work required and are actually good at what you want them to do.
The Statement of Professional Standing is something that is coming in on 1 January 2013 and will be a requirement for every practicing IFA to hold. They will obtain one from an accredited professional body and every IFA will need to have completed enough background work in addition to their qualifications to apply for one. It will be renewable annually so check the dates when you ask to see a copy.
I also think it’s important for an adviser to be Chartered and Certified. Obtaining Chartered status shows a commitment to standards, aptitude for learning and a desire to be knowledgeable for one’s client. However to be Certified, to me, means something quite different. The Certified Financial Planner qualification is only offered by the Institute of Financial Planning and involves a commitment to very high quality, ethical financial planning. A Certified Financial Planner understands the value of getting to know the person before their money.
Another important area that is often overlooked is to ensure your adviser is a specialist in what you ask them to do. Too often your IFA is a generalist financial adviser that can do a bit of life insurance, maybe a mortgage and most likely some investments and pensions. However I would think it is virtually impossible to be a true specialist in each of these areas. So if an adviser says they can cover all of these areas I would be slightly worried about the quality of advice I am about to receive.
Finally, it is all important to talk fees with your adviser. Regular readers of the blog will know that all IFAs will need to charge fees, officially if not in practical terms, come 1 January 2013. I say have the conversation before you commit to anything. Understand what you are paying for the advice you receive. It doesn’t really matter what the level of fee involved is as long as you are comfortable with the value you are getting back.