Where to find advice you can trust
How to tell if your financial adviser is up to scratch.
Active v passive investment
Learn the difference between active and passive managers.
Buying units in a fund
How it works when you invest in a fund, maybe for your pension or ISA.
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Where to find advice you can trust
How many times have you been told to “seek independent financial advice” before committing yourself to a financial decision? You’ll usually be referred to www.unbiased.co.uk where you’ll be able to search for a local financial adviser. But how can you tell if they’re any good?
Make sure they are registered
First of all, make sure that the IFA you choose is registered with the Financial Services Authority (FSA), by visiting its website www.fsa.gov.uk.
The FSA also has a list of unauthorised firms on its website that target unsuspecting UK investors. The firms often have impressive-sounding names, but if you do business with one of these companies you're likely to lose all of your money.
Genuinely fee based
Every IFA must offer customers the option of paying a fee rather than agreeing to the adviser being paid commission by a financial services provider. Paying a fee means you are much more likely to get unbiased advice.
Many IFAs pay only lip service to the concept so make sure yours has a clear charging structure in place for different levels of service.
Qualifications
The best firms are either run by or employ IFAs who have qualified as either certified financial planners (CFP) and/or chartered financial planners. These are the two highest qualifications IFAs can attain.
Take care not to confuse the CFP with the certificate in financial planning, which is the most basic qualification all IFAs must have.
Keeping up to date
It is a good idea to check if your IFA provides educational material on personal finance, plus regular updates on stock markets and changes in legislation.
Jargon-free
Make sure you understand what your adviser is saying. Ask for an explanation if you don't. It's no use letting an IFA bamboozle or confuse you with financial jargon as you'll always be thinking “what’s he saying?”.
Website
Not all firms make good use of information technology. Check out if your IFA has a website that lets you track your investments online.
Keeping in touch
A good IFA should be focused on your goals, understand your individual risk profile and your situation, and be able to create a quality plan tailored to those needs. He should respond quickly and proactively to changes in your situation or the economy.
Financial advice is more than just buying products and a good adviser will also work to co-ordinate your tax, insurance and legal needs. He should also keep in contact with you periodically.
Shop around
If you don't like the advice you receive, go and find another adviser.
What if it goes wrong?
Despite tight regulation in the UK there are still occasional instances of fraud, mis-selling and misleading advertising.
If you are a victim you should first contact the internal complaints system of the company involved. If this doesn't resolve your complaint then contact the Financial Services Authority and the Financial Ombudsman.
Source: Time For Money