So what is an FA, you can be either Independent or restricted whole of market or tied , an IFA is Independent and can give you advice from the whole market rather than just give you advice to which limited products that company or Tied Financial Adviser is authorised to give advice on or a restricted whole of market adviser (we are) means that i can give you whole of market advice and a wide range of products.
Financial Advisers (FA) work on your behalf and not the companies benefit meaning that any advice you receive is for the benefit of you and not the company.
Advice is classified in three different categories.
It’s important to understand all three…
Independent Financial Advisers or IFA's offer independent advice to their clients on financial matters and recommend suitable financial products selected from the entire market. As professionals they work independently for their clients. they are not tied in any way. They do not represent an insurance company or bank. IFA's are regulated by the Financial Services Authority (FSA) and are required to meet strict qualification and competence requirements. Independent financial advisers must offer their clients the option to pay for advice by fee as an alternative to commission.
An Independent Financial Adviser will normally conduct a detailed survey of the client's financial position and establish the client’s objectives & preferences. They will then advise suitable action to meet the client's requirements; this may involve recommending a suitable financial product. Individuals and businesses commonly consult IFA's on various financial planning matters including pensions & retirement planning, investment planning, mortgages, inheritance tax, protection arrangements (life cover), keyman policies and replacement & critical illness cover.
Restricted Whole of market
This means that they still offer everything as an IFA would provide but do not provide advice on complex products like ETF's investment trusts, VCTs and EISs
Tied Financial Adviser
These advisers offer you financial products from a small band of clearly defined companies and are generally paid by commission from these providers.
As the name suggests these advisers can only recommend products from one financial solutions company, usually they are employed by that institution - they are ‘Tied’ and paid by commission.
For those people happy with dealing via a Tied Agent (maybe because of trust in one’s favourite bank for example) then not being charged nothing initially for any advice given may suit them. However it is still important to know that in reality you will still be paying for the advice you receive - in this case the commission fee is usually built into the cost of the product itself. You may seek an Independent Financial Adviser by pay them by set fees to be sure that the advice you got was truly impartial and not impacted by an overly large commission linked to any one product which could occur with a Multi-tied of Tied arrangement if you also wish.
Before contacting an adviser it’s helpful for you to get all your finances in order if you can write them down so you have an idea of what your circumstance is- you may not have a full financial plan in place yet but you should know the following…
1. Financial assets i.e. Investments & Savings, value of your home etc
2. Current debts owed i.e. credit cards, mortgage, loans etc
3. How much you think or want to save or invest
4. Your current plans you have if any i.e. savings, life ins, investments etc
The above should be set against the overall financial objective you’d like to achieve. If you’ve done this kind of homework in advance prior to bringing in an adviser they will then find it much easier and quicker to help you set in place a plan to achieve your financial goals.
In the case of financial advice it’s either fee based or by commission, but one thing is certain in life you will retain that adviser for a long time just like a good car mechanic or plumber, when you’ve received a good service and it is cost effective you will use them again and again and you will also recommend him/her to your friends and family.