A huge shake-up in financial advice begins next week. Commission paid to advisers will be banned, in the hope of stopping middlemen advocating deals that pay them the most. It means most consumers will need to pay a fee upfront, rather than have it taken from their investment. Below, Mel Kenny (right), director of adviser firm Radcliffe & Newlands, says consumers still risk being pushed unsuitable products.
Changes are coming which will affect the way you receive and pay for financial advice. They are designed to remove commission bias and make charging transparent while ensuring advisers are highly-qualified professionals, rather than just salespeople.
This, to me, sounds great. But consumers will still need to do their homework on their adviser, as he or she may still push unnecessary products, which will end up costing big.
The problem, which we can't get away from, is that in an industry full of products, it seems there always has to be a sale.
Further up the sales chain, there are still overpaid reps on "win-a-Ferrari"-style sales targets. It's their job to turn newly-polished advisers into zombies selling the latest investment fad, encouraging the moving of money from one company to another, and landing the client with another new charge.
Don't worry, I'm not all doom and gloom. These people are few.
Avoid 'great blokes'
If you want to avoid these advisers, look out for good, informative testimonials — not the "great bloke" ones. Also, check their affiliations, or the code of ethics they adhere to.
For example, the older generation, some of whom are vulnerable, may find it more reassuring to turn to someone accredited by the Society of Later Life Advisers.
Be careful of the adviser who encourages you to take his agreed fee via a product. That's because, guess what, they'll need to sell you a product whether it's right for you or not — not so unbiased after all.
Of course, you can go DIY and avoid having to put your trust in this virtual stranger with so much influence in your life. There's so much information out there to enable you to make a financial decision. But even here, much of the information is biased, and designed to make a sale.
The investment DIY supermarkets' quiet gravitational pull of bullish expert views and analysis lead to only one outcome — the selling of funds. Reviews play on our natural optimism about future returns.
Sell, sell, sell
Make no mistake, fund supermarkets rely on fund sales. Yet they know little about you, the risk you can afford to take or the silly investment mistakes you are inclined to make.
Yes, you have the power to choose, but you are still very much being sold to.
My tip here is to catch some goodwill adviser presentations run by local social groups. Don't be afraid to ask your burning question and nudge for an opinion.
In most situations, something has got be sold. Just make sure your adviser is selling expertise and care, not the product.
Views do not necessarily reflect those of MoneySavingExpert.com.