Free checklist: Choosing the right financial adviser

Financial advisers are authorised and regulated in the UK by the Financial Conduct Authority.

You should check that all the firms on your shortlist are suitably authorised, something which can be done by looking them up on the FCA Register, which you can find by clicking here.

You should never take financial advice from anyone who doesn’t appear on the FCA Register; we recommend removing anyone who isn’t authorised by the FCA from your shortlist.

Independent financial advisers can choose products from the whole of the market. On the other hand, restricted advisers have opted to limit the types of product they can advise on or the product providers they can recommend.

The definition of a restricted adviser is extremely broad and captures many different types of firms. It is therefore impossible to say that all restricted advisers should be avoided. However, we recommend that you fully understand the nature of any restriction and how it will impact the advice you receive before you agree to work with the adviser.

The minimum qualification level a financial adviser must have is known as QCF Level 4. However, many do not believe that this is enough and have undertaken further study and passed additional exams to achieve higher, and often specialist, qualifications.

We recommend working with advisers who have attained Certified or Chartered status.

Financial advice firms, as well as individual advisers, can attain Chartered status, which in many respects represents the gold standard of financial advice. It demonstrates that advisers within the firm have achieved the highest levels of technical and professional knowledge through professional qualifications, they keep their knowledge and skills up to date through ongoing professional development and they adhere to an ethical conduct, which could be enforced through disciplinary sanctions.

You can learn more about the benefits of working with a Chartered Financial Planner by clicking here. Furthermore, you can confirm the Chartered status of a firm by searching the Chartered Insurance Institute Chartered Financial Planner directory, which you can find by clicking here.

We recommend only working with a firm of Chartered Financial Planners.

Certain types of advice require specialist knowledge. For example, to advise on Final Salary or Defined Benefit pensions, the adviser must have passed specific qualifications and receive specialist authorisation from the FCA.

We recommend asking your adviser to confirm whether they hold any of the specialist qualifications required to advise you.

Most financial advice is delivered face to face and, in most cases, we believe that this is the most appropriate way to receive advice.

However, some people may prefer to receive advice remotely, using telephone, email and video conferencing. You therefore need to understand how your adviser tends to work and ensure it matches your requirements.

Many people dive into the subject of charges too early when considering which adviser to work with. We believe that is a mistake; there are at least half a dozen more important factors to consider. Nevertheless, eventually you will need to consider the fees you will pay to receive advice.

We believe that understanding how an adviser charges should come before understanding what they will charge. Many advisers have a ‘contingent’ charging model. That means they give their advice for free, only implementing a charge if you accept their recommendation and take out a financial product. Whilst ‘free advice’ might initially sound attractive, a contingent charging model such as this can lead to conflicts of interest; after all, the adviser only gets paid if they recommend a product to you.

We recommend you work with advisers who charge for their advice. That way, you can be sure it isn’t biased; the adviser does not have to recommend a product if they are to get paid. This is particularly important when working in complex areas such as Defined Benefit or Final Salary pensions.

Now’s the time to understand the fees an adviser charges and the services you will receive in return.

Comparing the charges made by advisers can be difficult, however it’s far from impossible.

We recommend asking advisers to provide written answers, explaining what they are likely to charge you and the services they provide. Often, this can only be done following an initial meeting, once the adviser has had chance to understand the complexity of your situation. However, other advisers display their fees online.

We recommend selecting an adviser who is experienced in working with people who are similar to you. That means they are more likely to have the experience and knowledge you need.

We recommend asking potential advisers about the types of clients they work with and only agreeing to work with the adviser if they can provide evidence of advising people with similar circumstances to your own.

Financial advice can generate a significant amount of paperwork; ideally, your adviser should have a support team in place to assist them. In fact, the support team are often as important as the advisers themselves.

We recommend understanding the administrative support the adviser has in place and asking to be introduced; you need to get on with them as well as the adviser.

The most successful adviser / client relationships are those built on trust and long-term commitment. Therefore, it’s important to understand the plans your adviser has for their business.

If they are planning to sell up or retire soon, that might be a concern, especially if you will need advice for many years to come. Likewise, if they plan to expand the business, you should seek reassurance that they will build the support team and infrastructure to maintain their service standards as they take on additional clients.

The aim of your initial meeting with an adviser should be to understand if they are the right adviser for you and whether you are the right client for them.

Consequently, the first meeting should be without cost or obligation.
We recommend that the first meeting should take place in the adviser’s office. This will give you an opportunity meet their support team and understand a little more about the environment in which they work.

Furthermore, we recommend avoiding any adviser who attempts to pressurise you in any way into becoming a client at that initial meeting. You should be left to make such important decisions in your own time and at your own pace.

And finally, once you have drawn up your shortlist, completed your online checks and then met with advisers, the most important thing to do next is trust your intuition.