How to find a financial adviser
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It is a truth universally acknowledged that a person in possession of a good fortune should be in want of a financial adviser.
There are 26,000 professional advisers out there according to the regulator, the Financial Conduct Authority — but the type of service and level of guidance you will need will vary according to your circumstances.
So who could be your perfect match?
A tailored solution
A good starting point is to consider what you want from an adviser-client relationship, as this will point to the type of adviser you need — and how you will be charged.
“An adviser can take into account a person’s personal circumstance and find ways to make their pensions, investments and assets work best for them,” says Keith Richards, chief executive of the Personal Finance Society.
Broadly speaking, financial advisers can provide specific recommendations for products including investments, pensions, insurance and mortgages and how to use these in the most tax efficient way.
Wealth managers are more focused on setting up and managing a portfolio of investments.
Financial planners help their clients to define their financial goals, and forecast whether savings and investments are on track to provide what is needed. While they can recommend a course of action, they cannot sell you products.
However, many financial and wealth advisory firms also offer financial and tax planning, as well as legal services.
As final salary pensions become rarer, more of us will need to generate an income from our investments to fund retirement — and many are prompted to seek professional advice for this reason.
An important distinction to be aware of is whether investment advice is “restricted” (where advisers focus on a limited selection of investment products or providers) or whole-of-market, which the FCA defines as offering access to a wide range of financial products and providers.
Whatever your immediate financial concerns, your needs will change as time goes by, so you should consider a firm that can provide advice to you throughout the years.
But finding “the one” requires diligence — and it is perfectly acceptable to be picky. As Adam Price, founder of peer-reviewed adviser site VouchedFor, says: “For many people, choosing the right financial adviser is one of the most important decisions they will make.”
Starting your search
Avoid making a decision based on a brief internet search for “advisers in Tunbridge Wells” (or wherever you live). Doing so will bring up a host of paid adverts, many of whom are not authorised financial advisers at all.
The official directories of professional bodies are a good place to start.
For example, the Personal Finance Society’s accredited adviser directory, findanadviser.org, allows you to search by town, postcode, advice specialism or chartered status. Profiles show whether the adviser has a valid statement of professional standing (a requirement to practice), the adviser’s professional qualifications and any specialist accreditations.
The CISI (Chartered Institute of Securities and Investment) has its own “wayfinder” tool to find a financial planner.
There are also listings and reviews on the websites Unbiased.co.uk and VouchedFor.co.uk.
Word of mouth
Maybe your friends or family have a trusted financial adviser. Remember that old maxim about never discussing money? That’s Georgian gentility.
Ask about your friends’ experience with their advisers. If it is positive, ask them for an introduction. Most firms will offer a free introductory chat, although due to the pandemic, this will now be online rather than face-to-face.
Whether you’ve found an adviser online or been referred to one, you should check their FCA authorisation number, which should be on their homepage. If they haven’t got one, move on.
But if they have, it is still best to check with the FCA. Before you give anyone your personal information, let alone your hard-earned cash, use the FCA’s ScamSmart website to search for rogue operators.
Some websites display genuine client reviews, for example on VouchedFor.co.uk. Mr Price comments: “It can be particularly useful to read reviews from people in the same situation as you, whether that’s based on level of financial expertise, income, total savings or service received.
“Even if you have heard about an adviser from a trusted friend, it’s worth checking the adviser’s reviews to make sure it’s not just your friend who thinks they’re great.”
Be prepared to talk money
Some advisers will show their fees on their website; others do not, but will disclose their costs in the introductory phone call or at the initial meeting.
Remember, different types of advisers will charge differently, so it is worth discussing how much you will have to pay before signing on the dotted line and exactly what this will buy you.
For example, if you want a one-off piece of advice about consolidating your pension pots or setting up an Isa, you might pay a set price in advance.
Other advisers, such as wealth managers, might charge a percentage of assets for managing your investment portfolio over a set time — known as ad valorem in industry speak. It goes without saying that the more money you have invested, the more cost-effective fixed fees are likely to be.
Many advisers have hourly fees, which vary depending on the firm, but the average across the UK is £150 per hour.
According to adviser directory Unbiased, fees can range from £500 for investment advice to £5,000 or more for some kinds of pension advice. To help gauge your expected fees, Unbiased has a very useful Cost of Advice calculator.
Finally, look for a firm whose culture and ethos best fits with your own. Do they genuinely care about their clients and their staff? Do they show a true understanding of your passions and your values? Are they active in the community? If everything looks good on paper but they just don’t seem to get what motivates you, they may not be the one. The right adviser for you is out there — keep looking.
Simoney Kyriakou is senior editor of FTAdviser; Twitter @MoorgateMermaid