Financial advisers: what are they and what do they do?
16th Apr 2024 Managing your Money
3 min read
It can be challenging to manage your finances, especially considering the jargon and the various ways of saving, budgeting, and investing. So, it can be hard to know how best to plan for your future.
A financial
adviser can be handy, as they can help you manage your money and meet your money
goals.
This article explores what a financial adviser is and how they can
help you.
What is a financial adviser?
Financial advisers are experts who are
experienced and knowledgeable in managing money.
As they are well-qualified, they can support
you with various things, such as optimising your pensions and investment
strategies.
Many advisers can offer impartial advice on various
topics, although some can only advise you on a select number of products and
services.
This is what separates independent financial
advisers (IFAs) and restricted advisers.
While an IFA can recommend services and
products from a wide range of providers, the latter can only offer services
from a limited range.
A restricted adviser should always explain why
this is, so you’re always getting personalised advice.
Depending on the type of adviser you opt for,
they may offer an advised or non-advised sale.
An advised sale is when an adviser lists a
policy, explains it, and why it is the best option, while a non-advised sale is
when an adviser outlines a policy but leaves it up to you to
decide.
What services can a financial adviser offer?
When it comes to big events such as retirement and
buying a home, it’s hard to know how to plan and how these changes will impact
your finances.
It’s a good idea to speak to an adviser if you need guidance on pensions and pension transfers, annuities,
mortgages, tax and estate planning, investing, saving, and budgeting.
Financial advisers can do more than simply find
and recommend policies and plans – they can also share what you must know about
managing your money.
With the right adviser, you can understand the
more complex aspects of your finances.
How much does it cost to use a financial adviser?
Financial advisers charge for their
services in one of three ways: an hourly, flat or commission-based
fee.
Your first meeting is usually free. This
is where you and your adviser will ask each other questions, and they can
discover how they can help.
If you decide to use the adviser, this is when
you agree on the fee.
If an adviser charges an hourly fee, ask for a
breakdown of the work done and how long it took.
Advisers who charge a flat fee usually do so to
help with a one-time project, such as consolidating your pensions.
An adviser may alternatively charge a
percentage-based fee, usually based on a percentage of the money you need
advice on.
When do I legally need a financial adviser?
Using a financial adviser is not usually a
legal requirement, but it’s worth considering when making big decisions that
will impact your financial future.
After dedicating a lot of time to saving and
managing your money, the last thing you want is to be impacted by taxes and
fees that might affect your plans.
What questions should I consider when seeking financial advice?
It’s worth asking yourself a few questions
before seeking financial advice.
Am I planning for a specific goal? Whether planning your retirement or considering buying a home,
deciding on a goal can help you focus.
How much risk am I willing to take? For example, when investing, it’s important to determine how much
risk you are willing to take.
Am I looking for advice or information? While some advisers will offer you both, not all will. You should ask
any prospective adviser about how they can help.
Am I looking for one-off advice or ongoing
support? Many financial advisers work with clients
over a long period, but this can be expensive.
What can I do if I’m unhappy with the advice?
If you aren’t happy with your financial advice,
gather documents showing how you were misadvised and write to your adviser’s
firm.
If you’re unhappy with the response, contact
the Financial Ombudsman Service for free, which may be able to offer a
resolution.
How can I find the right adviser?
It can be tricky to find the right adviser. While
many will be happy to advise you on a wide range of topics, some have
specialisms that may not suit your needs.
Before deciding on an adviser, find out their
areas of expertise and if they align with your goals.
While you can independently seek an adviser,
you can also use Unbiased to find the right adviser for your unique circumstances who will help you reach your financial
goals.
Banner image source: Unsplash+
