Independent Financial Advisers, or IFA’s, are qualified financial advisers who have access to all the products, available from all companies in the market (over 30,000 at the last count).
An IFA’s job is to research the whole market and to recommend to their clients the most appropriate financial solutions, even if sometimes this doesn’t involve their client buying a product at all.
An Independent Financial Adviser will ask you a whole range of detailed questions about your circumstances, your financial goals and your attitude to risk. Once this is completed an IFA will provide you with detailed written recommendations, based on their research of the whole market. It’s up to you to then decide whether you want to take any of the actions recommended.
You are not sold a product, you are given advice.
Not all financial advisers are Independent, some are what is know as Restricted advisers. A good way of looking at the difference between the approaches is to be aware that an Independent Financial Adviser only works for their client, whilst a Restricted Adviser also works for their company.
Independent Financial Advisers are sometimes seen as being only for the rich, but we firmly believe that this should not be the case. Most of our clients have anything from £10,000 up to £500,000 at most, in assets, excluding their houses. For many dealing with us is the first time they’ve received Independent Financial Advice and we hope their testimonials will give you an idea of how we’ve helped them.
You might also be interested to know that the latest Financial Ombudsman Service’s annual review revealed that 61% of the claims it received were about Banks and only 2% of complaints were about IFA’s. (See financial-ombudsman.org.uk more details)
The Financial Ombudsman Service also added that they received very few complaints about advisers. They only accounted for 0.5% of complaints received.
Don’t forget that unlike most other professions, including the legal profession there is no statute of limitation on claims against advisers.
However, before you decide on what type of advice is best for you, it’s important to also understand how much an IFA costs.
What are Restricted Advisers and how do they work?
Many people buy financial products through Restricted Advisers, most commonly though their Bank or Building Society. However, there are some other well know Financial Adviser forms who are also Restricted, like St James’s Place for example.
When they want advice on an investment product or pension for example, they just pop along to their Bank or Building Society and accept what is offered through that company.
What that means is that they are only being offered the products that company provides, or has a tied relationship with, which in some cases can be more than one company.
The person providing them with the product advice is acting on behalf of the company they are employed by.
Many people buy products this way, because they usually feel more comfortable buying from a big organisation and assuming that they are bound to get good advice. Often, what they are actually getting is limited advice on the range of products that company offers.
From 1st January 2013 most of the high street banks announced that they would no longer be offering advice to investment customers with less than £100,000 as a result of the Governments Retail Distribution Review (RDR) rules. This has left the majority of “ordinary” customers without assistance in planning for their future.