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Financial advice guide

Financial advice guide

Category: Money

Updated: 09/05/2016
First Published: 28/08/2013

The financial product market can seem like a complicated maze. Whether you want to buy a house, invest for the future, plan for your retirement or protect your family with life insurance, you may be feeling a little daunted and confused about where on earth to start. A financial adviser, however, can help you plan your route and lead you to the most suitable product.

Where to start when seeking financial advice:

An independent financial adviser (IFA) researches the whole financial market on your behalf, offering you unbiased, independent and impartial advice on all the different types of financial products available. They will then recommend the most appropriate product for you according to your financial situation.

An IFA will ask you detailed questions on your finances to help determine your financial goals. You'll have to provide honest and in-depth answers to questions on your financial commitments, your investments, your credit history, your debts, your state of health and your risk tolerance. They will then be able to decide what help they'll be able to offer you.

Every financial adviser who gives advice should be regulated by, and answerable to, the Financial Conduct Authority (FCA). This means that if anything goes wrong, you will be able to make a formal complaint.

It also means that IFAs have to provide you with reasons as to why they have recommended a certain product or taken a particular course of action.

All IFAs are required to explain how much their advice will cost and agree with you as to how it will be paid. All costs must be clearly presented to avoid any confusion or misinterpretation.

Payment can be a set fee payable upfront.

Ask yourself the following questions:

  • Do you want professional advice on the whole market rather than a limited number of product providers?
  • Do you want your adviser to be independent of commercial relationships that may sway the product you are recommended?

If you have answered yes to both of the questions, you should seek help from an IFA. But before making an appointment, you need to think about what you need:

  • Do you need someone to recommend a mortgage, a pension, insurance or advice on where to invest your money?
  • Do you want to choose a product by yourself, but just need detailed information?

Think about what financial product you want:

  • A mortgage to buy a home
  • A pension for when you retire
  • Insurance to cover you if you become ill, or to help your family if you were to die
  • Somewhere to invest your money to build up a lump sum
Take the time to find out more and research the market first by visiting the Moneyfacts.co.uk Best Buy charts

This will help you to get a feel for the top products available in the current market and how they work.

Before your meeting with an IFA, make sure you compile detailed information on:

  • Your financial circumstances - pay slips, tax code and National Insurance number.
  • Details on any debts such as credit cards and loans.
  • Any financial products you already have - savings, investments, pensions, etc.

An initial disclosure document will be compiled by all IFAs, which will include key facts on:

  • The services on offer
  • The range of products they choose from
  • Fees you have to pay

The 'Key Facts' document is very important, so make sure you are given one up-front.

What to avoid:

If you feel pressured, do not sign anything! You should not be forced into signing something you are not comfortable with.

  • Register to see if the firm or IFA is registered with the FCA. If they are not regulated by the FCA, you won't be able to complain if something goes wrong, and they are committing an offence by giving financial advice.
  • Don't be afraid to ask questions. Ask them to explain why they have recommended you the product.
  • Use Moneyfacts.co.uk to find, research and compare products before you visit an IFA - be knowledgeable!

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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