Many people will turn to a financial adviser at some point in their lives to help them make financial decisions. Therefore, it seems important that you know what to look for in a financial adviser.
Financial Guidance is NOT Financial Advice
There is a big difference between financial guidance and financial advice. Guidance is given by things like advice charities and financial journalists like Martin Lewis. It is provided to give you broad information about different types of services and options available to you.
Financial guidance is not regulated by the FCA, but advice is. This is because when giving advice, financial advisers look at your personal circumstances and decide what is best suited for you- the advice is tailor-made.
Qualifications
Given that financial advice is FCA regulated, advisers must have the relevant qualifications:
- A level 4 or above of the national Qualifications and Credit Framework
- A Statement of Professional Standing (SPS) where they have signed up to a code of ethics and complete a minimum of 35 hours professional training every year
SPS certificates are renewed annually so you should ensure your adviser’s certificate is up to date.
It is your right to ask what qualifications your adviser has.
Integrity
Your adviser should never advise you to take action which would be classed as illegal.
They should also answer any questions you have… by asking lots of questions, you can make sure that you fully understand everything your adviser discusses with you.
Any information you disclose to your adviser should be completely confidential. Your relationship with them should be one built on trust.
Honesty and Full Disclosure
Your adviser should tell you whether they are an independent or restricted adviser. Independent advisers can give impartial advice about a range of financial products from various companies.
However, restricted advisers can only give advice on a limited range or products or products offered by a limited number of companies. You have a right to know whether your adviser is looking at an unrestricted number of products, or if they are constrained to only provide advice from one, or a limited number of, providers.
A restricted adviser may recommend a suitable product for you within the range they sell, but they are not required to tell you whether you could purchase a similar product from elsewhere at a cheaper price.
Payment of Fees
When receiving financial advice, you should be aware of what you are paying for and what the costs are, and have this in writing. You will have to pay for financial advice and may also have to pay charges on the financial products you buy.
Making a Complaint
You have the right to complain to the Financial Ombudsman if you have received bad advice, incorrect or misleading information or poor administration.
The financial products recommended to you by an adviser should be affordable for you, consider whether you want short or long term savings, account for the level of risk you’re willing to take, and account for whether you pay tax.
If your adviser is unable to find a product that suits your needs, they must refer you to another adviser to help you.