Getting financial advice
This section explains what financial advice is, the different types, when you might need it and where to get it from. For more detailed information and tips on how to prepare yourself when seeing an adviser, get a free copy of our Getting financial advice printed guide. You can download or order it online from Publications.
- Planning ahead with your money
- Getting financial advice
- Types of investment advice
- Paying for financial advice
- Preparing to meet a financial adviser
- What to expect
- Adviser qualifications
You can get financial advice to help you plan ahead and make the most of your money from a variety of sources, including banks and building societies, insurance companies, financial advisers and planners, mortgage brokers and stockbrokers.
Financial advice is when a professional adviser assesses your personal circumstances and recommends financial products that are suitable for you. The adviser will then give you a recommendation in writing.
If you do decide to see a financial adviser, they can give you advice about managing your money as a whole, or help you with specific needs or goals. You may decide you want financial advice if, for example, you:
- want to start saving for a pension or to get a mortgage;
- are considering protecting your family in the event of accident, illness or death;
- inherit a lump sum of money; or
- are coming up to retirement and want help converting your pension fund into retirement income.
You don’t have to see a financial adviser when you’re buying a financial product, but if you don’t, you may choose something that isn’t suitable for you and you’ll have fewer grounds to make a complaint.
A financial adviser will assess your personal circumstances and recommend financial products that are suitable for you.
You will generally have to pay for this service. You can search for an adviser in your local area and one that specialises in what you want to buy.
For information about getting a mortgage see Getting help from a mortgage broker.
For information about buying insurance see Insurance – Getting help.
There are three types of investment advice.
- Independent advice – where advisers make recommendations on products after researching the whole market and offer you the opportunity to pay by fee for their advice.
- Multi-tied advice – where advisers are able to recommend the products of a limited selection of providers.
- Tied advice – where advisers can only advise on the products of one provider.
For details about mortgage or insurance advice see Getting help from a mortgage broker and Insurance – Getting help.
The scope of advice a firm offers may vary between different products, for example a firm may offer mortgages from the whole market but only offer investments from a limited number of providers. So think about the range of products you want and ask advisers what they offer.
For details about mortgage or insurance advice see Getting help from a mortgage broker and Insurance – Getting help.
There are three main ways of paying for investment advice.
- Fees – by paying the adviser a fee, either at an hourly rate or a set fee.
- Commission – by paying indirectly through commission, which is deducted by the product provider from the product(s) you invest in. As well as the initial commission charged when the product is taken out, there may also be annual commissions, known as trail commission.
- Fees and commission – by paying a combination of fees and commission.
Not all advisers offer all three payment options. Make sure the adviser offers the payment option that you want. Ask the adviser to explain what you’re paying for, how much it will cost and how you will pay for it. If you want to pay by commission, ask your adviser how this will be calculated. Make sure you understand and are comfortable with the payment arrangements before proceeding. If you’re getting investment advice, ask your adviser if the costs include a review of your investments from time to time or if you must pay for that service separately.
The adviser will ask you questions about your financial circumstances and your future goals, assess your personal situation and recommend financial products that are suitable for you.
Before meeting an adviser it is a good idea to:
- get together the information you may need to give the adviser, such as details of any partners, children or other dependants, how much you earn, what income tax rate you pay and details of any financial products you already have;
- think about your financial goals and how much you think you can afford to set aside to reach them; and
- consider how you feel about risk – is it important that you don’t risk losing any money you put in, or are you willing and able to accept the risk of a possible loss if it gives you the chance of a bigger return?
The adviser will give you details of the service they offer and the range of products they can advise about. They’ll also give you details of how you can pay for this service. Use the information from different firms to help you shop around and compare what is being offered.
Once they’ve discussed your goals with you they’ll give you a written recommendation of which products are suitable for you. They’ll also give you information about the product which should answer questions about:
- its aim;
- your commitment;
- how your payments are invested;
- the main risks; and
- the tax position.
The adviser will also tell you about the fees and charges and how they will affect your investment.
Read this information to make sure that the product is right for you, and always ask questions if you don’t understand anything.
Advisers may hold different qualifications. Ask the adviser what relevant qualifications they hold. You can check what qualifications stand for on the Unbiased.co.uk website – see Related links.