Getting yourself the right type of financial advice is a vital, yet sometimes confusing, aspect of managing your savings. With so many different options for your money seeking out and utilising the products right for you can prove to be quite the task. However this doesn’t mean that the task is impossible, it’s just a case of evaluating what your financial goals and targets are, and what is the best path to achieve these goals. We are committed not only in helping you to plan your finances successfully, but also to make a financial world that can often be difficult to navigate that little bit clearer.
We understand that many of you may not have the confidence to research this world independently, may want a little more information in areas you have researched or simply do not have the time to research. Our primary goal is to make your financial life easier and ultimately more rewarding so if you are in need of assistance treat this article as a first step, an introduction to the world of financial advice.
What kind of advice is available?
Seeking advice from an IFA isn’t just something for high-flying hedge-funders looking for another billion pound investment. There are three different forms of financial adviser: an independent financial adviser, a tied agent or a multi-tied agent. All three can offer advice on various different financial matters including pensions, investments, savings, trusts and life assurance.
A tied adviser can only offer products from one specific provider, for example a bank or building society. If you are happy to make your financial dealings through a sole provider then this is a fine option, but be aware that this will limit the amount of products available to you.
Multi Tied Advisers
Multi-tied advisers work from a range of products offered by a limited set of providers. They will have usually established ties via commercial relationships thus increasing the products they can offer. However, since they still have a limited number of products, they may not have one suitable for you. We advise that you research which products they offer before deciding if they are the right type of adviser for you.
Independent Financial Advisers (IFA)
IFAs work without links to any providers so they can offer truly independent advice on products across the whole financial spectrum without bias. They are free to research the market specifically for you and then find the best information suited to your particular circumstances. This is the advantage of going through an IFA. They usually ask for payment either through fixed fees or a commission combination.
Using independent financial advice can be most advantageous as it opens up a world of products accessible by the adviser. An IFA’s main role is to find, research and put forward solutions to the financial queries you present. The IFA will evaluate your specific financial situation by having a detailed and personal discussion about your circumstances, aspirations and also your risk levels and investment outlook. They will always be helpful and clear as to why they are recommending the chosen products. Tied agents are slightly different as they, as their name suggests, are tied to a specific organisation, like a bank or building society. Oftentimes people choose tied or multi-tied advisers for reasons of ease, it is simply less hassle to walk into your local bank branch and take a look at the financial products they have to offer you right there. With this option you will only be privy to the specific products the adviser is tied to, offered by the organisation or company they are employed by. For this reason it may be more worth your while to use a truly independent adviser, purely for the wider range of products that will then be available to you.
When can an IFA help?
There are numerous times throughout your life when you will have to make important financial decisions such as buying a home, entering retirement or starting a family. When you approach these life-changing periods proper financial planning is essential. If you are juggling work with family life then it’s very likely that you won’t have the time to plan for yourself. By consulting with an IFA you will be able to clearly establish your priorities and financial goals, be they long or short term. They will evaluate your circumstances by looking at your current financial state, any debts you may have and what kind of goals you are seeking from investing.
How does an IFA make money?
Independent financial advisers are again divided into two groups: fee earning and commission earning. Fee earners usually charge an hourly fee much like a law firm. Commission earners make money based on the product you take up. It is a common misconception that commission earners tend to be more biased than fee earners. In reality, the competitiveness of the product market means that almost all commissions paid are about the same – they don’t vary much between products. Also, the products aren’t available more cheaply direct. Finally, assuming you’ve signed onto a service contract you like with your IFA, you’ll get consultations and advice on a regular basis forever – without having to pay anything at all. With a fee based IFA it’s pay-as-you-go and in any case they may recommend a product very similar to the commission based IFA anyway.