Independent Financial Advisers (IFAs)
IFAs generally offer a personal and bespoke service, specifically tailored to your particular circumstances. They will take the time to understand your financial affairs, and your aspirations and requirements in retirement. IFAs come in all shapes and sizes, and some of the more innovative offer impressive websites and easy to understand options. Whether individuals, small groups of professionals or national firms they will often have advisers based locally, which can be a major advantage.
The new rules regarding advice mean that all IFAs will now charge you for their advice and time. This compares to previously where their remuneration came from commissions from the fund providers. IFAs are typically cagey about fees, and understandably want to discuss with you the extent of the work envisaged before exploring costs. Only around 2% of advisers publish their fees on their websites. When Which? asked firms to quote for drawing a lump sum from a £150,000 pension pot and putting the remainder into drawdown, the range quoted was from £2,500 to £7,000. Some have flat fees and others charge a percentage of your investment, so if you have a small pot you may be better off with the percentage approach and those with large pots might find the flat fee cheaper.
As with any service you are taking, get a number of quotes and look carefully at what you are getting for your money and what is best for your particular circumstances.
If you don’t have a tame financial adviser that you can speak to (and let’s face it, few of us do) then you can find one at the three main websites that list financial advisers. The first two sites offer free introductory sessions with an adviser (although virtually all advisers now offer a free intro session) and regularly offer money off the fees that advisers will charge you after the initial free consultation. If you are in any way uncertain about your options it is well worth taking up the offer of several of these free introductory discussions. There is no limit to the number of exploratory discussions you can have with different advisers, and there is absolutely no pressure to give the adviser your business just because they have spent an hour of their time with you. They regard these meetings as a lead generation exercise and are all part of the cost of doing business. The main web sites to go for to find an IFA are:
Unbiased.co.uk has 15,000 advisers on their books and you can find one by searching on your postcode. They only list fully independent advisers who will give you advice from across the market and are not tied to to only providing products from the bank or financial institution they are associated with. As with all comparison sites, you need to be aware of the commercial arrangements in the background. Make sure you untick the “Only show sponsored results” box on the left hand side of the page to ensure you see the list fo all advisers in your area, rather than just those who have paid more to appear in the sponsored results list. Equally, just because an IFA has lots of information about them in the listing, does not mean they are better or more appropriate for you than those with a simple name and address – it just means they have paid more for the exposure
Vouchedfor.co.uk only lists independent advisers. It can be searched by post code and has a brilliant review feature where you can see testimonials from satisfied clients – think TripAdvisor or Check-a-Trade for financial advisers! The same caveats applies as for Unbiased.co.uk in that you need to click on the ‘More Search Options’ tab and then uncheck the misleadingly named ‘Show only advisers available for contact’ in order to see all advisers in your area. As well as reviews from verified clients, Vouchedfor.co.uk also has a star system where advisers receive up to 5 stars from reviewers. Curiously, the order in which the advisers are presented on the page is determined by an algorithm that takes into account distance from you and number of reviews, but not the ratings provided in the client review. A case of being too evenhanded I wonder.
FindanAdviser.org is run by The Personal Finance Society. It will do a perfectly good job of finding you an IFA close to you, but it has the feel of a trade body designed site rather than the two above that are more ‘social’ in their look and feel. As unbiased and vouchedfor don’t have to be scrupulously fair to all their members they are able to include useful material such as testimonials.
The Money Advice Service is the Government’s own source of advice for consumers on all money matters. They offer free and impartial money advice to consumers, and you can therefore rely upon their independence. They have a Retirement Adviser Directory which allows you to search for an IFA by postcode.
A quick word on the difference between independent and ‘restricted’ advisers. Unless an adviser is ‘restricted’ because they specialise only in pensions, I can see no benefit in restricting your range of possibilities to a limited number of products – so personally I would always choose an independent adviser. Whichever flavour of adviser you do choose, it is worth knowing and being comfortable with their status before you approach them.
Unless they are part of a large group, advisers generally use one of a number of outsourced platforms designed specifically with IFAs in mind, and the adviser will use the platform to guide you through your investment choices and to provide you with reports and statements. Not surprisingly, adviser platforms all have slightly different fees but because they generally don’t charge setup fees the total % charge can be slightly lower than if you were to go to a direct platform. But then of course you have to pay the adviser for their time in managing your portfolio – so overall costs may not be too different. To avoid confusing matters we have not included price charts for the major advised platforms but you can access them through the LangCat report on the Retirement Savings Market.
- More Reading
There are many good articles out there about choosing financial advisers but ‘How to Hire an Adviser‘ by Judith Evans from a Financial Times Special report on The Future of Retirement is a great summary of all the things you should consider before your first meeting with your first short listed adviser.
- We have found that following the industry trade media often throws up useful insights for us consumers, and this is evident in the article from Professional Adviser on the top 10 best adviser websites for 2015. Whilst a snazzy website should not be the deciding factor on which adviser you choose, the thought that goes into making a website easy to navigate for potential new clients often indicates a firm that has carefully thought through the entire process. Certainly a review worth reading if you are looking for an adviser.
- BBC’s Moneybox Live with Paul Lewis dedicated an entire programme on 30 September 2015 to finding an IFA. Key takeouts included a list of really useful websites to consult for help in finding an IFA in your area, an encouragement to shop around and take advantage of the hour long initial consultations offered by advisers, and a reminder about the free telephone service offered by the Money Advice Service with their Retirement Adviser directory and access to PensionWise.