Independent Financial Advice

When it comes to complex aspects of personal finance - such as pensions and investments - think twice.

Sifting through your post can be an arduous task with the amount of junk mail the average person receives these days.

And some of the biggest offenders are high street financial services companies proclaiming new and better products to help us sort out our finances. More and more organization are also now trying to sell us financial products over the phone.

Bombarded with products from all directions, where do you start? Most people understand the purpose of car and house insurance, so responding to a mailshot or arranging a policy over the phone is fine – provided you read the small print and are happy with the terms and conditions and, most importantly, the cost. But when it comes to more complex aspects of personal finance – such as pensions and investments – think twice.

Picking the wrong investments today could leave you sorely lacking when you need to use your savings in future.

You may know enough about the world of personal finance to organize your own affairs. And provided you have the time to dedicate to trawling the market to find the best products for your needs then this is certainly one route to take. But if, like most of us, you don’t have the time, knowledge or inclination to do your own research you should seek help from a professional.
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Good quality advice is essential

Good quality advice is essential and it will not come free, nor is it that easy to find. Britain is not short of Advisors, but you must be aware that not everyone calling themselves a ‘financial consultant’ is able to scour the market and find the right product for you. The advice many offer is far from impartial. It is important to understand the different levels of advice you can receive before signing on the dotted line.

Company representatives, or direct salesmen, are employed by and work solely for just one company. By law, representatives are only permitted to sell the products of the company they represent and through which they are authorized. So, if you are after a personal pension, for example, the salesman will check that this is the right type of product for your needs but will not be able to advise you on other companies‘ products.

Then there are ’appointed representatives‘ or ’tied agents.‘ These are the companies which have a contract with one particular life office to sell one or more of its products in return for commission. The tied agent is not necessarily employed or owned by the life office and usually operates under their own company name - rather than that of the company they represent. They may act independently in other lines of business but as far as the investment and life products are concerned, he or she is no different from a company rep.

The third are independent financial Advisors. They are not tied to one company but rather their job is to examine your needs and to search the market for the product that is most suitable for your needs in terms of performance, charges, and contract flexibility from all - or most - providers in the market.

As if this isn't enough, the situation may be further complicated in future, with the introduction of 'multi-ties'. This involves financial Advisors setting up ties with several companies for selling some investment products. Even if this goes ahead, it is a long way off, so you don't need to worry about this yet!

Qualifications are becoming increasingly important

Qualifications are becoming increasingly important in the financial services sector and are a good indication of a firm's commitment to high standards. You can rest assured that all professional financial Advisors, whether independent or tied to one company, must obtain industry-recognised qualifications before they will be allowed to give financial advice.

Independent financial Advisors vary in the way they are remunerated. Some rely entirely on commissions paid by providers on the sale of products. Others are remunerated entirely by fees paid directly by the clients. More and more take part commission and part fee for each sale. Then there are those who will operate on a commission or a fee basis depending on your preference. Since January 1995, companies have been required by the regulators to disclose all their charges in full, including sales commission, in a pre-sale 'key features' document. Therefore you will know how much your Advisor is paid.

By taking independent financial advice you stand a better chance of getting a more suitable product for your individual circumstances.

“Picking the wrong investments today could leave you sorely lacking when you need to use your savings in future”

Click here if you would like a Financial Advisor to contact you