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Site updated:

12 February 2012

Getting financial advice

This information applies to England, Wales, Scotland and Northern Ireland

About getting financial advice

There will probably be times in your life when you're not sure what to do with your money or what decisions you need to make about your financial future. There are thousands of different financial products on offer and choosing between them can be difficult.

If you have little experience of dealing with finances or you're confused about making a decision, it may be helpful to get professional financial advice.

A financial adviser can help with things like:

planning for your retirement
investing or saving money
making the most of a lump sum of money such as a redundancy payment or an inheritance
buying a property or taking out a mortgage
when your life changes for example, you're starting a family, getting divorced or you've been widowed.

On this page you can find information about:

Who gives financial advice

You can get financial advice from a professional financial adviser. The adviser will look at your personal circumstances and your financial plans and recommend products to help you meet your needs.

Financial advisers have to be authorised by the Financial Services Authority (FSA). This includes advisers working for companies such as banks and building societies, as well as individual advisers working for themselves.

You can check that an adviser or the firm they work for is properly authorised on the FSA Register. Go to: www.fsa.gov.uk.

If a financial adviser is not properly authorised, you can make a complaint to the FSA.

Types of financial adviser

Depending on the type of adviser you see, the range of products you'll be offered may be limited. It's usually best to get independent financial advice so that you can look at the widest range of advice and products available. But there are other types of financial adviser and it’s important that you know the difference so that you can get the right kind of advice for you.

There's three types of financial advisers:

independent financial advisers (IFAs) give advice about the whole range of financial products from all the different companies available
tied advisers give advice about a single company's financial products, for example a bank or building society
multi-tied advisers give advice on financial products from a limited range of companies.

Making sure your adviser is properly qualified

It's important to find out how well qualified your adviser is so that you can be confident that the advice you're getting is correct.

There are many professional qualifications that advisers can take. Some advisers are qualified to give general financial advice. Others are qualified to advise in specific topics such as pension planning, investments or mortgages.

There's a full list of the different qualifications a financial adviser can have as well as the professional bodies that represent them on the unbiased.co.uk website. Go to: www.unbiased.co.uk.

What if the adviser isn't qualified

If you take advice from an unqualified adviser or one who is not regulated by the FSA and you later find out the advice is wrong or the financial products they have recommended are unsuitable for you, it can be harder to make a successful complaint or get compensation.

How to check you're getting the right advice

When you see an adviser they should give you the right kind of advice for your financial needs. If they don’t, you may be able to complain.

The financial products that an adviser recommends should:

be affordable for you
take account of whether you want to save for the long or short term
be suitable for the amount of risk you want to take
take account of whether you pay tax.

If an adviser ignores these points and recommends a product that is not right for you, and you later lose money because of this, you can complain.

An adviser only has to give you the right kind of advice within the limits of what they are qualified to do. For example, if you see a tied adviser, they will only recommend a suitable product for you from the range of products they sell. A tied adviser doesn't have to tell you that you could buy a similar product from another company at a cheaper price. If you later find this out, you would not be able to complain.

For this reason, it might be better to go to an independent financial adviser who will be able to look at products from the whole of the market.

If a financial adviser can't find a product to suit your needs, they must refer you to another adviser who can help you. If they don’t do this, you may be able to complain.

Checklist of things to do at your first meeting with an adviser

Here's some tips about things to do at your first meeting with a financial adviser:

check that the adviser you are seeing is qualified to give you the advice you need, for example that they specialise in pensions or investments
take notes so that you have a clear record of what was said at the meeting
ask lots of questions and make sure you understand everything you are told
take time to think about any decisions or to compare products with another adviser. You don’t have to sign up for anything on the spot
be prepared to answer questions honestly. A financial adviser will ask you lots of personal questions about your financial plans and personal circumstances so that they can recommend the most suitable products for you
check that your personal information is kept confidential, and find out whether it is used for marketing purposes.

What to think about before you see a financial adviser

Before you look for a financial adviser, try to work out what kind of advice you need. This will help you find the right adviser for your situation. Here's a checklist of some of the things to think about:

are you planning for a particular event? For example, your retirement or saving up to buy a house or your children’s college fees. You need to look at your life and work out what events you need to plan for financially
do you have spare money to invest? Take a good look at your finances to see how much you can afford to save. Make sure you have cleared any outstanding debts, loans or bills first
how much risk are you prepared to take with your money? When you invest money, there’s a chance that you could lose money on your investment. Some investments are riskier than others but can make you more money if they do well. As a general rule, the longer you invest for, the more likely you are to make money, rather than lose it
how long do you want to tie up your money for? The length of time you are willing to invest for affects the types of products an adviser will choose
do you want advice on different kinds of investments? For example, ethical or environmentally friendly investments or financial products that invest according to Shariah principles?
are you looking for advice or just information? You may want someone to advise you what to do with your money or just information about a financial product so that you can make your own choice. Some financial advisers will provide both information and advice
do you want one-off advice or advice on an on-going basis? Make sure you are clear about how much the advice will cost you and that you can afford it.

For more information about how to work out your finances, see What’s the best way to save.

For more information about investments, see Investing in the stockmarket.

What the financial adviser should tell you

When you first meet with a financial adviser, you should be given clear information on the services the adviser offers, including:

whether the advice is independent, tied or multi-tied
the level of advice you will receive. For example, you may just be looking for information to help you decide what to do, or you may need someone to suggest the best options for you
whether the financial products they're recommending come from the whole range on offer, are a selection from a limited number of companies, or are from just one company or financial group
how much you'll have to pay for the advice.

Your adviser should also give you two key facts documents with information about:

the adviser or firm you are using and the services they offer
the products they have recommended for you
the right to change your mind about taking out a financial product and how long you have to do it
your right to be given further information or an explanation if there is something you don’t understand.

If the adviser doesn't give you this information, make sure you ask them for it.

How much will the advice cost

You will have to pay for financial advice and you may also have to pay charges on the financial products you buy.

You need to be very clear about how much the advice is costing you and what the charges are on the products you are recommended. Make sure you understand all the costs involved and compare fees and investment charges between different advisers before you make a final decision. You may be able to get the same product at a cheaper price with another adviser.

For more information on what charges you have to pay on investments, see Investing in the stockmarket.

Ways to pay

There are three main ways to pay for financial advice. You can pay by:

fee. This is a fee that you pay directly to the adviser and may be set at an hourly or fixed rate
commission. The company which issues the financial product pays the adviser an amount of money when you take out the product. The amount could be a proportion of what you initially invest in the product, or a proportion of the money the investment makes. This may be a one-off charge when you take out the product, or you may have to pay an annual amount each year
fee and commission. You may be asked to pay a combination of fee and commission, depending on the level of advice you want and the kind of financial product you choose

There may be extra charges for looking after your investments or providing advice on a regular basis.

How to find a financial adviser

To get advice on the widest range of products and compare costs, you should look for an independent financial adviser. The following organisations can put you in touch with a qualified adviser in your area:

Independent Financial Advice Promotions (IFAP) www.unbiased.co.uk.

Personal Finance Society www.findanadviser.org.

Ethical Investment Research Service www.eiris.org.

You may already have financial links with a bank or building society and trust their products, so feel more comfortable about seeking their advice. This is called taking tied advice.

If you decide to do this you need to be aware that there may be other financial products from other companies that are cheaper or better suited to your needs.

To find a tied adviser you simply need to approach the company, bank or building society that sells the products you are interested in.

Complaints about financial advisers

You can’t complain to a financial adviser if your investment doesn’t make as much money as you’d hoped. But if you have lost money because of bad advice, wrong or misleading information or poor administration, you can complain to the adviser who originally gave you the advice.

You must follow the company's complaints procedure. If you’re not satisfied with the response, where you take the complaint next depends on who gave you the advice.

If the adviser you saw was authorised by the Financial Services Authority (FSA),you should take your complaint to the Financial Ombudsman. To find out if the Financial Ombudsman can deal with your complaint, you can call their consumer helpline on 0300 123 9 123 (8am to 6pm Monday to Friday). There’s also a special complaints form you can download and send to them by post. For more details, go to www.financial-ombudsman.org.uk.

You can also find out from the consumer helpline whether the Financial Ombudsman can deal with a complaint about a company which is not authorised by the FSA.

If you received financial advice from a solicitor or accountant, who is authorised by the FSA to give financial advice, you may need to take your complaint to the professional body which regulates them.

If you’re not sure where to complain, you can contact the FSA consumer helpline on 0300 500 500.

Further help and information

On Adviceguide

For more information about managing your money go to:

The Money Advice Service

The Money Advice Service is a free, independent service. Their website has lots of useful information to help you manage your money including borrowing money, savings and pensions and getting financial advice. Go to:

www.moneyadviceservice.org.uk

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