What is a financial adviser and how do you find one?
Many people go through life without seeking financial advice as there is sometimes a bit of confusion around what financial advisers are and what they do. This article aims to shed some light on financial advisers and gives some tips on how to choose one.
What is the definition of a financial adviser?
In the UK, a financial adviser is a qualified finance professional that is authorised and regulated by the Financial Conduct Authority (FCA). When a financial adviser specialises in a certain area of advice, they may refer to themselves as an ‘investment adviser’, ‘mortgage adviser’ or ‘pension adviser’, amongst others. Furthermore, when a financial adviser is dealing with specific product types, rather than ‘adviser’, they may use the word ‘broker’ - as in ‘mortgage broker’ or ‘insurance broker’.
Financial advisers can either work directly for a provider (like an insurance company or bank) and are only able to offer products available from that provider (known as restricted advisers) or, as we do, operate independently with access to financial products from the whole of the market. You may have heard the term ‘IFA’ used in relation to financial matters, which stands for Independent Financial Adviser.
It’s not uncommon for financial advisers to advise on a range of financial topics. For example, mortgage advisers will often also be qualified to advise on life insurance products and many financial advisers are qualified to offer a holistic approach to all areas of financial planning.
What is the difference between a financial adviser, a financial advisor and a financial planner?
Financial planners gain qualifications in financial planning to enable them to offer financial advice. A financial adviser (with an ‘e’) is the same as a financial advisor (with an ‘o’) - using an ‘e’ is the correct spelling but using an ‘o’ in the spelling is becoming increasingly common. All these terms are more or less interchangeable.
Is financial planning the same as wealth management?
Technically, financial planning is the same as wealth management in that a financial adviser seeks to understand your financial goals and put in place a plan to achieve them. Typically though, the term wealth management is used to describe financial planning for those that have already amassed a certain level of financial independence and may focus more on investment, tax efficiency, budgeting and inheritance planning.
How many financial advisers are there in the UK?
In 2019 there were 27,557 financial advisers in the UK and 5,236 financial advice firms, according to Next Wealth’s analysis of the FCA’s data bulletin. The long-term trend suggests that the number of financial advice firms is shrinking whilst the number of advisers increases. Interestingly, 89% (4,655) of all financial advice firms in the UK have 5 or fewer advisers. There are 536 firms (10%) with between 6 and 50 advisers (we sit in this category) and only 45 firms (0.86%) have more than 50 advisers.
Where to get independent financial advice?
To get independent financial advice, you need to get in touch with an Independent Financial Adviser, or IFA. IFAs can either work on their own or you can speak to an independent financial advice firm that employs financial advisers, as we do.
One way to find an independent financial adviser is via a personal recommendation from a friend, family member or colleague. However, it’s not always clear whether or not good advice has been given until a reasonable period of time has passed. Equally, particularly when it comes to investment performance, you really need to know the original financial aims and risk tolerance of an investor before you can judge their financial return and the advice given. As a result, a recommendation from a peer may well just be whether or not they liked the adviser.
You could try looking on Google Maps for financial advisers near you, where you can read reviews from customers new and old. It is worth mentioning though that you are more likely to encounter reviews from disgruntled customers here as satisfied customers are generally less likely to leave feedback.
The Money Advice Service suggests the following:
For advice on pensions, retirement, long-term care, equity release, inheritance tax planning, wills or probate you can use the Money Advice Service adviser directory or the Society of Later Life Advisers search tool.
For advice on mortgages, protection insurance, investments and general financial planning you can use the Chartered Institute for Securities and Investments search tool or search the register on the Personal Finance Society website.
If you are looking for insurance products, you can find a broker using the British Insurance Brokers’ Association (BIBA) find a broker service.
You could also talk to us about all aspects of financial advice, we are a chartered firm of independent financial advisors based in Tunbridge Wells, Kent. Locally we serve customers in Kent and East Sussex and we also welcome clients from across the UK. Please get in touch for your free initial consultation.
What questions to ask a financial advisor?
Choosing a financial adviser is a big decision and you need to make sure that they are right for you. The Money Advice Service recommends some key questions that you can ask of any potential financial adviser and a standard set of questions will enable you to easily compare advisers.
What do you charge and how much am I likely to pay?
What services do you offer? Are you independent?
If you’re not independent, can you look at products from across the market?
Do you have qualifications that are above the minimum you’re required to take?
Do you have many clients who are in a similar position to me?
Will you give me ongoing advice and what will this cost?
We have answered all these questions and many more over on our Financial Advice & Investment page.
What’s next?
Head over to our homepage to find out more about us and see if we are the right financial advisers for you. You can also speak to one of our expert IFAs about anything do to with your financial plans. Based in Tunbridge Wells, we serve clients across the UK.
Don’t forget, this article offers information about pensions and investing and should not be taken as personal advice. Remember that investments can go up and down in value, so you could get back less than you put in.