![How to find a good financial adviser (who won’t leave you penniless)](/https/www.telegraph.co.uk/content/dam/money/2023/06/16/TELEMMGLPICT000339542848_16869189689890_trans_NvBQzQNjv4BqqVzuuqpFlyLIwiB6NTmJwfSVWeZ_vEN7c6bHu2jJnT8.jpeg?imwidth=680)
How to find a good financial adviser (who won’t leave you penniless)
Telegraph Money shares how to seek out a trusted source in the advice market
![How to find a good financial adviser (who won’t leave you penniless)](/https/www.telegraph.co.uk/content/dam/money/2023/06/16/TELEMMGLPICT000339542848_16869189689890_trans_NvBQzQNjv4BqqVzuuqpFlyLIwiB6NTmJwfSVWeZ_vEN7c6bHu2jJnT8.jpeg?imwidth=680)
For some people, financial advisers have an unfortunate reputation as pushy salesmen, who promise the world before disappearing with the family gold.
But while a series of high-profile scandals over the years might have damaged trust in the advice market, it certainly doesn’t speak to most advisers working today. They say strict rules brought in a decade ago have transformed the industry and wiped out the financial cowboys.
And, at a time when it’s becoming increasingly difficult to know what to do with your money for the best, a good financial adviser can be a huge asset.
The challenge now is finding the right adviser for you – here, Telegraph Money shares some tips on how to do it.
Why would you need a financial adviser?
A financial adviser can help you organise your finances if you have pensions and investments, to organise how to fund long-term care, inheritance tax and other tax planning, and life and health insurance.
If your finances are fairly straightforward, or you do not have a large amount of money to invest, then it’s probably not worth paying for advice.
The average advice customer has more than £150,000 of investable assets, according to the Financial Conduct Authority (FCA). This can include pensions, as well as stocks and shares in an Isa or general investment account, and any other savings or you might have.
Some advice firms won’t take you on without a hefty sum for them to advise you on: 17pc of advisers require you to have at least £200,000 in assets, and a further 24pc will only accept customers with at least £100,000, according to Schroders.
Even if you do have a large amount of assets, you also may not feel the need to pay for advice if you’re satisfied you have the time, knowledge and desire to manage your finances yourself.
How to find a financial adviser
As with most things, it’s best to shop around before you commit to any one individual or company to look after your finances.
Personal recommendations from friends and family can be a good indicator, and some unions or workplace pension schemes may also be able to recommend someone.
There are also a number of services that can help with your search. Money Helper has a Retirement Adviser Directory where you can search for professionals to help you with later life planning.
The Society of Later Life Advisers has a search function that does a similar job. There’s also a directory tool from The Personal Finance Society, which can help you find a local qualified adviser.
Alternatively, comparison sites like Unbiased and VouchedFor can help match you with an adviser.
Advisers must have certain qualifications in order to practise, and it’s a good idea to check these while you’re weighing up your options.
As a minimum, they’ll need a degree-level qualification, or equivalent, and have passed a level 4 qualification in financial advice from a course that’s recognised by the FCA, covering areas such as personal taxation, financial protection and financial planning practice.
Once qualified, they must have registered as an “approved person” by the FCA, so it can be worth checking if they appear on the FCA Register.
How much does financial advice cost?
There are two main ways advisers charge for their advice: ongoing fees, which will be charged as a percentage of your assets, and a fixed fee, which is usually for one-off advice.
Expect to pay between 0.5pc and 1pc for ongoing advice. As a bare minimum level of service, you should get an annual review of your circumstances, and most of the time you’ll get advice on your whole financial life.
Fees can have a huge impact on your returns, so make sure you factor them in. On £200,000 of assets, 1pc fees would cost you nearly £71,500 over 20 years, assuming 5pc investment growth a year. Fees of 0.5pc cost you more like £36,000.
Fixed fees for one-off advice sessions can work well if you need a specific question answering, or advice on one topic. You might be happy to run your own investment portfolio, for example, but want help with estate planning.
Are there different types of financial advisers?
The majority of advisers can be split into two categories: local and independent, or national and restricted. It’s not a hard and fast rule, but it can help to think of your options this way when you’re trying to pick one.
Most advice firms are local, “one-man band” companies. They will work predominantly with people in their area and get most of their clients through referrals.
Meanwhile, national advice firms will have offices and advisers based all around the country.
“Trust is the biggest barrier to people taking advice,” said Mike Barrett from the Lang Cat. “If your friends and family are recommending a local adviser then perhaps local is best, but if you can’t find that then you might gravitate to the comfort of a larger, national brand.”
The difference between a restricted and an independent adviser comes down to the products they can recommend: an independent adviser can recommend financial products spanning the whole of the market, while a restricted adviser might only be able to recommend products from one provider or a panel of investment companies.
Most national companies, such as Quilter or St James’s Place, are restricted, while most local advisers will be independent financial advisers (IFAs). There’s nothing necessarily wrong with a restricted adviser, but make sure they explain the nature of their restrictions.
What happens if you get bad advice?
Financial advisers are regulated by the FCA, so there are protections in place if you think you have been wrongly advised. Note that these protections won’t cover you if investments just perform poorly, as that is just the nature of investing – it’s more if the advice you’ve received is unsuitable for your circumstances.
First, you should complain to the advice firm. In your complaint, map out exactly what the problem is and what you want them to do to put it right. It’s worth putting the words “formal complaint” in the subject line of your email or letter, or saying this on the phone.
You need to give the company eight weeks to put it right. The firm should give you a “final response” letter that outlines the reasons behind the decision on whether to uphold your complaint, and the compensation on offer (if any).
If you are still unhappy, you can complain to the Financial Ombudsman Service. An investigator will look at your case and, if it upholds your complaint, will set out its own terms for compensation with the firm.