What can a financial adviser do for me?
You should consider getting financial advice for complex products so that you don't end up with something unsuitable. These include:
- Pensions and Investments
- Life insurance and health insurance
- Tax and inheritance planning
- Mortgages (via a broker) and equity releaseproducts
- Long-term care planning
A financial adviser can scour the market to find investments and products that are tailored to your circ*mstances, and help you personally plan for the things you want to do with your money in the future.
You can still buy complex financial products without an adviser. For instance if you're confident enough you can use investment platforms which offer a range of products, such as stocks and shares Isas and self-invested personal pensions (Sipps), with lower fees. Whereas products like equity release require you to have received financial advice first.
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How do I find a good financial adviser?
It's really important to shop around when looking for an IFA. A comparison site is a good place to start; Unbiased and VouchedFor are the biggest.
You can use their filters to narrow down a shortlist based on areas of expertise and customer reviews. We recommend setting up meetings with at least three IFAs so you can decide which can provide you the best service for your needs, and the best value for money.
If you don't need to meet your adviser in person, you could save money by looking outside of your local area. For example, VouchedFor data shows that financial planning costs in South East England tend to be higher than in the north.
The following resources can help you find the best adviser for you. It's best to draw up a shortlist of at least three financial advisers and ring them all before deciding on one.
- The Financial Conduct Authority register - the FCA's register lets you check whether your adviser is properly authorised.
- Society of Later Life Advisers - a searchable directory of advisers that specialise in later life advice
- Personal Finance Society - a searchable directory of PFS members, who could hold certifications including Chartered Financial Planner.
- The Chartered Institute for Securities & Investment (CISI) - a trade body for financial advisers. Use its Wayfinder tool to search for financial planning firms by post code that hold CISI accreditation.
You can also take a look at MoneyHelper's Retirement Adviser Directory.
- Find out more:Best stocks and shares Isas 2024
Independent vs restricted financial advice
There's an important difference between independent and restricted financial advisers.
If an adviser says they are independent, their advice must be:
- based on a comprehensive analysis of the market
- unbiased, with no influence from product providers
Restricted advice
Restricted advisers will either focus on just one subject area, like pensions, but look at the whole of the market, or could recommend investments from all providers, but just for one type of products, such as only recommending unit trusts.
Other types of restricted advisers may give advice on more than one area, but will only have access to a limited number of providers. This means you won't be getting recommendations from the whole of the market.
If you visit a restricted adviser, it is essential that the adviser explains exactly what service he or she is providing to you.
Financial providers can be especially useful for investors who want their money to be invested in a particular way - whether you want to avoid controversial companies, or support firms driving positive change.
It is possible to pick your own ethical investments, but the lack of agreed standards on what makes a fund ethical or ESG means you have to do extra checks. An adviser can do these for you, with more knowledge of the sectors concerned.
An adviser who's specialised in this area should ask you about your ethical concerns and interests early on, perhaps by questionnaire.
Also look for advisers who are members of the UK Sustainable Investment and Finance Association (UKSIF).
Some advisers use platforms, which are online services that feature a range of investments in one place. As long as advisers are using them to benefit their clients, platforms are an acceptable part of independent advice. However, advisers should use more than one platform.
Some advisers use model portfolios. These are pre-constructed collections of investments, a bit like chocolate selection boxes. Each model portfolio meets a specific investment risk profile, so one could be high risk, one low risk and one intermediate.
Before recommending a model portfolio, advisers must ensure each investment suits their client - like making sure you like every individual chocolate in the box.
Independent advisers can use model portfolios, but only once they have considered options outside them. They should not use just one model portfolio.
Alternatives to financial advisers
MoneyHelper, Citizens Advice Bureau and Pension Wise (for the over-50s) provide free and impartial financial guidance.
In contrast, advice from an IFA is a service that will recommend a specific product based upon your personal situation. Guidance will give you information to help you narrow down your choices - read more about free guidance services (including for debt).
Robo-advisers
Robo-adviser or 'do-it-for-me' investment platforms assess your attitude to risk and use algorithms to make recommendations, usually a portfolio of funds.
Although usually cheaper than IFAs, they operate through smartphone apps or websites and rarely offer advice on other aspects, like tax or savings.
- Find out more:the best robo-adviser platforms
One-off advice from investment platforms
Some traditional DIY investment platforms and robo-advisers are also beginning to offer guidance and restricted financial advice.
| Provider | Description | One-off costs | On-going costs |
|---|---|---|---|
| Aviva | Aviva Financial Advice has pension and investment advice options. | Report fee of £625 | Between 0.25% and 2%, depending on how much you invest |
| Bestinvest | The investment platform offers two packages: Investing For Your Goals, and the Portfolio Health Check. | Goals service costs £295, health check costs £495 | n/a |
| Charles Stanley Direct | The investment platform provides a OneStep Financial Plan where you get a personal consultation with a financial adviser to produce an action plan , and OneStep Financial Coaching for a one-hour coaching session with a qualified financial planner | £150 for one-hour coaching session, £900 for personal consultation | n/a |
| Hargreaves Lansdown | Investment advice helps you to choose the right investments, while financial planning helps you work towards a goal | n/a | Investment advice (fee of 1%) or financial planning (between 1% and 2% plus VAT), minimum fee of £495 |
| Moneyfarm | The robo-adviser offers fund portfolios that are managed on your behalf with access to a dedicated consultant for fees | n/a | Consultant costs between 0.35% and 0.75% - larger portfolios have lower percentage charges |
| Nutmeg | The robo-adviser, which is backed by JP Morgan, launched its service in 2018 and offers restricted financial and retirement planning advice. | £575 | n/a |
Note: costs correct April 2023
Which? Money Helpline
For free, impartial financial guidance, Which? Money members can also call the Which? Money Helpline.
With more than 100 years of experience in financial services between them, our team of experts can provide information on a range of personal finance topics, including investment options but also insurance, care costs, tax, savings and seeking reimbursem*nt after a scam.
Financial advisers and equity release
Before purchasing an equity release product, you’re required to get professional financial advice - make sure they are are specialists in equity release. Advisers should hold one of the following qualifications:
- CeRER (Certificate in Regulated Equity Release) – awarded by the Institute of Financial Services (IFS).
- CER (Certificate in Equity Release) – awarded by the Chartered Insurance Institute (CII).
- ERMAPC (Equity Release Mortgage Advice & Practice Certificate) – awarded by the Chartered Institute of Bankers in Scotland. (This qualification was discontinued a while back but may still be held by some advisers.)
You can find a qualified adviser through the Society of Later Life Advisers. The Equity Release Council also has a member directory you can use.
Which? has partnered with HUB Financial Solutions who can also advise on whether equity release is right for you, and how to take out a suitable product if it is.
A free alternative is the charity StepChange, which compares providers and can arrange an equity release deal for you through a StepChange Financial Solutions adviser. Its advisers are paid a salary, so there are no sales targets, bonuses, or commissions.
Financial adviser qualifications explained
All financial advisers will have to have a minimum qualification equivalent to an undergraduate degree, regardless of the type of advice they provide.
All advisers now have to meet QCF level 4 - the equivalent of the first year of a degree.
The Financial Services Skills Partnership has also created Appropriate Exam Standards (AES), which awarding bodies use to develop new qualifications.
Under QCF level 4, the subject areas IFAs must be qualified in are:
- regulation and ethics
- investment principles and risk
- personal taxation
- pensions and retirement planning
- financial protection (Level 3)
- financial planning practice
Further adviser qualifications include:
In the UK, certification is available through The Chartered Institute for Securities and Investment (CISI). Those who wish to be a certified financial planner must pass the CISI's Financial Planning and Advice examination.
It's probably the most rigorous of the credentials we looked at, with only 22% of advisers passing the exam and only 8% passing the required case study.
Achieving the qualification requires an extremely close look at a very technical case study.
To achieve chartered status, an adviser must pass at least four specialist exams, be a member of the Personal Finance Society (PFS), and provide evidence of at least five years of experience.
Being a member of the PFS means they must adhere to a code of professional ethics and do a certain amount of continued professional development each year. Of the six exams available, there was a pass rate of just 60% in 2016.
The chartered seal is a well-respected quality mark in financial advice and other professions.
Meant for advisers who specialise in helping clients close to retirement, SOLLA doesn't require an exam.
Instead, advisers must work to maintain a high level of later-life financial planning knowledge and demonstrate the ability to communicate clearly in a one-to-one interview.
If you want an adviser who aspires to a standard recognised internationally, the International Organisation for Standardization (ISO) offers a further qualification.
The ISO22222 certificate involves an 'at work' assessment of the adviser, designed to measure their ability to perform as a financial planner.
If an adviser holds this qualification, you can be confident that they are able to carry out their role to an objectively measured standard.
Advisers re-certify annually, and undergo a three-year cycle of reviews regarding different aspects of their business.
The ISO qualification also requires advisers to sign up to an ethical code of conduct.
What should I look for when choosing a financial adviser?
Our step-by-step guide can help you understand what to look out for when you choose a financial adviser.
1. Figure out what you need
If you need retirement advice, it might be best to go for an adviser who specialises in pensions.
If you need a complete financial plan, go for an adviser who offers the whole package rather than just focusing on, say, investment advice.
2. Check their qualifications
Although the Retail Distribution Review (RDR) legislation requires that all advisers are qualified to a certain level, it's worth checking that they actually are. Look out for extra qualifications too, as that will show they've gone the extra mile.
3. Negotiate fees
Get quotes from three financial advisers. Don't take the fee the adviser quotes as gospel. If you think you should be paying less, discuss it with them. Find out more in our guide on how much financial advice costs.
4. Get it in writing
Ask for a hard copy of the adviser's recommendations in case anything goes wrong. If you don't understand something, ask the adviser to explain it.
5. Check it's a personalised service
Be sure you're not receiving generic advice that could apply to anyone - ask questions about the suitability of the recommended products with your situation.
6. Make sure you can forge a relationship with your adviser
You're trusting this person with one of the most important things in your life - your financial wellbeing - so they need to be right for you.
7. Do the fact find in advance
This will prepare the adviser for what you're like and save time at your first meeting. Ask your adviser to send you the form before your first meeting.
What happens after I've selected an adviser?
You'll have an introductory meeting, where the adviser spends about an hour finding out what you're looking for and explaining their services. They should also give you something called a 'key facts document', outlining their fees and what you can expect from your relationship.
Fees may vary depending on what you want advice for, and the amount of money in question. For more information on fees, check out our dedicated guide.
If you are happy to use the services of a financial adviser, they will carry out a 'fact find'. This provides the adviser with information about your finances, goals and attitude to risk so that they can recommend suitable products for you.
This will be followed by a full financial plan, including product recommendations and any tax benefits available to you.
Once you have agreed with a financial adviser's recommendations, and the cost of using their services, the plan that they have put forward will be implemented. You may get the option of an ongoing review.
What if things go wrong?
Financial advisers are regulated by the FCA, and this gives you access to redress should anything go wrong with your advice through the Financial Ombudsman Service (FOS).
This means that you can complain to the FOS if you're unhappy with any advice you've been given or if you think you've been mis-sold, and the FOS will take the appropriate action - for example, ordering your adviser to pay compensation.
The FCA has the power to fine financial advisers who have broken regulations.
You won't be compensated for investments falling in value, or a company in which you hold shares goes bust, unless this poor performance resulted from bad advice given by a regulated Independent Financial Advisor that has since gone bust.
The Financial Services Compensation Scheme may cover up to £85,000 of investments per person, per product. You can claim for free online: there's no reason to use a claims management company.
