While it is always nice to have an idea of how to approach any common situation, the fact is that there can be times when only an expert will do. Major financial decisions tend to require a financial adviser, such as obtaining or modifying a mortgage. As your wealth builds and your pension pot grows, it can also be worth calling upon a professional to ensure that your money works as hard as it possibly can. The demand is clearly there – there would not be as many advisers touting for business otherwise. However, it is essential to find the right professional for your needs, and that is precisely why we have pulled together our 10 best tips to get that decision right the first time.
1. Seek Out Personal Recommendations
There are various rules and restrictions surrounding the advertisement of financial services and it can often be easiest and most worthwhile to see who those around you have used and their own thoughts and experiences. In knowing someone directly, you will have a reasonable idea of each other’s circumstances and demands, and the person you speak with on the matter will hopefully be able to say for sure whether their own experiences measure up to your expectations.
2. Check a Potential Adviser’s Credentials
As noted, there are plenty of regulations within the financial industry. The specifics will vary depending on where you’re based, but not just anyone can set up as a financial adviser. The only ones you should even consider will be licensed and accredited, and the important first step is to ensure that they have those licenses to hand. No potential adviser will be offended by you asking for proof – indeed, many will show you before you even ask.
3. Qualifications Also Play a Part
Passing licensing tests and checks is one thing, but you also want the reassurance that your IFA knows what they are doing. Certain qualifications form part of the initial licensing, so you know that the advice you receive from any registered individual will be good enough. However, if you demand the best of the best, there is no harm in checking what else they are qualified in or any professional memberships they may potentially hold.
4. Experience Matters
Qualifications and licenses tell an important part of the overall story, but nothing quite beats experience. This goes back to word of mouth in a way – your friends and colleagues have seen your potential IFA in action and confirm that they get the job done. Experience levels come down to preference – older ones will have more outright experience, while younger ones will have more current qualifications, so decide which of these upsides matters most or go for something in the middle.
5. Ask for References
The choice of IFA is not hiring for a role in the conventional sense, but you should still attempt to get some real-world insight into what they can bring to the table. Ideally, they will allow you to contact past and current clients, who will have the same kind of insight into their work habits as a contact of your own.
6. More Clients are Often Better
Some people make the mistake of thinking that if an IFA has lots of clients, they will not have the time to give the necessary attention to them. However, hands-on work for an IFA is actually relatively limited, and we prefer to see a busy IFA as a good one. To gain and keep a large number of clients, they are clearly doing something right, and this is always an encouraging sign.
7. Try to Go Local
Even as remote working and phone interviews continue to grow in popularity, something is comforting about face to face contact when discussing money. You or the IFA may be prepared to travel a certain distance, but there comes a limit where it is no longer worth it. Much as with any business, there are local IFAs to meet demand just about everywhere, and their close proximity should make for a positive influence once you have worked out the rest of the tips on this page.
8. Try to Build a Relationship
If you need an IFA for a one-off transaction, like a mortgage application, then this part is less important. However, if they will help to plan your retirement and give investment advice, you want someone that will be in it for the long haul. You are the one with options here, so go with someone that is friendly and approachable, and that you can stand to be around and trust for regular meetings.
9. Consider Specialist Areas
There is nothing to say that you need to use one IFA for all of life’s major decisions. Indeed, many IFAs are more specialised in certain areas than others. You may not want to use the same one that set up your mortgage approval to decide on your investment funds. This is more work for you overall, but specialist advice is often superior and more lucrative in the long term for obvious reasons.
10. Price Matters
Perhaps the most complex element of choosing an independent financial adviser is how much they charge and who pays. It is worth it to get a handle on some of the terminology beforehand, so you know what you are talking about and then use that knowledge to work out a fair price. To make things more difficult, some products rely on commission, while other advisers charge by the hour. Know the cost of the advice beforehand, along with who pays, and ensure that your adviser does not limit or adjust his advice based on who pays the biggest commission on referrals. Naturally, the expected cost of the service should also firmly factor into your initial decision of who to work with, so be sure to avoid any potential candidates that are unwilling to lay out a clear and thorough pricing structure beforehand.