If you want one-on-one help on bill-cutting or credit cards, then sadly it simply doesn't exist. It's a DIY job. Yet, you're in the right place; this site's designed to help (and in case there's any confusion, I'm not a financial adviser, I'm an ultra-specialised journalist!). The best place to start is the Give yourself a Money Makeover article.
 When to use an advisor What kind of advisor? Other advisors to use Related Articles/Discuss/Contacts |
 Dereck knew more about tax than he did about ties |
When to use an advisor
If you're scared, short of time or don't feel confident doing the research when looking for complex financial products, you'll find financial advice worthwhile.
Yet if you're money savvy, my instinct would be to DIY it, as it's cheaper. This involves doing your own research. As well as the articles on this site, I wholeheartedly recommend a book by Which? called Be Your Own Financial Advisor* (my Money Diet* book is about cutting bills and MoneySaving, this one is on hardcore financial products).
However with complex financial products or, even more, the interaction of various complex financial products, professional help can be very useful, and it's worth paying an adviser to ensure you get it right. Yet be aware they're better at some things than others:
- Annuities (pensions). An annuity is the product you trade your pension in for each year when you retire, in order to get an annual payment for life. It's a big one-off financial transaction, about which you can't change your mind once done. As it's crucially important that you check out the whole market for this, most people should consider an adviser.
If this is the only thing you're using an adviser for, it's worth looking at one of the three big specialist annuity advisers, Annuity Bureau, Annuity Direct and William Burrows.
- Endowments. The financial services industry, and many of its advisers, are culpable for the problems with endowments; yet they're also often your best chance of sorting them.
If you have a sizeable endowment and are considering surrendering or selling it, the complexities can be huge; consulting an IFA to work through the options is often worthwhile. It's also worth checking whether you're eligible to complain about a missold endowment; the compensation can be worth thousands (read the Endowment Misselling article).
- Financial and tax planning and structuring. At the high end finance can be complex; there's a range of sometimes impenetrable products that can be useful but are tough to understand. Here a good IFA can really prove him or herself.
- Investments. Choosing an investment is about assessing the risk and trying to second guess the markets. It's important to remember advisors don't have a crystal ball; their choices for you are best guesses, not certain knowledge.
While research helps, there's always an element of gambling when it comes to investment picking. If you go it alone, you get a head start because, do it right, and there are no charges (read Discount Brokers article). So the IFA has to pick substantially better than you to make up this difference.
Having said that, planning, structuring and timing investments for events (e.g. funding university fees) can be very complex and here IFAs can come into their own.
- Mortgages. Another huge financial transaction, so advice is a boon. Yet remember you'll get an advisor not an instructor, so the most important thing is always to make sure you at least know the basics before hand (please read my free guide to Mortgages or Remortgaging).
Yet unless you get an IFA who specialises in mortgages, you're often better off going to a specific mortgage broker, who can search the whole market for you without charging a fee. For full details on this read Mortgages: Sneakily Get The Best Advice For Free.
- Protection products. Life assurance, critical illness, income protection can all be complex products, with many exclusions. While in some events it can be done cheaply without an advisor (see Level Term and Mortgage Term life assurance articles) those with complex arrangements will find help useful.
- Pensions and pension transfers. Getting a private pension these days is often a simple case of picking a stakeholder correctly (see Pension Buying article). Yet pensions can be very complex, especially for those who have a sizeable existing pension, possibly through a company scheme and want to transfer it. In this case again, a correctly qualified IFA to work through the situation is a sensible move.
What kind of advisor to go for
Advisers are legally divided into one of three types.
- Independent Financial Advisors. These folks can advise and sell products from any provider right across the market and are obliged to give ‘best advice'.
- Tied Advisors. While nothing to do with S&M, it can be potentially more painful; these are the type of advisor you'll usually find in high street banks and doing door to door sales. The ‘tied' means they can only sell and advise on products from one bank/insurer's own range. In other words their job's to try and sign you up to one of their companies' products.
- Multi-tied Advisors. This is a new type of advisor, and they are starting to be more common especially in banks. They're allowed to sell and advise on products from a limited panel of firms. While certainly better than tied advisers, it gives the veneer of independence, but is still far short of it.
"If you're using an adviser, always, always, always ensure it is an Independent Financial Advisor (IFA)"
If you're going to get professional advice, always check it's from an Independent Financial Advisor, as these look at products from the entire market; unlike tied or multi-tied advisors who can only sell from a limited range. This is a legal distinction so ask them, Are you an Independent Financial Advisor? and don't accept any hedged answers.
Don't assume you'll pay less with a tied advisor
There's another reason to choose an IFA: it may well be cheaper than going to a tied advisor. Eh, shouldn't it be the other way around? Yes, logically you'd assume that a tied advisor would be cheaper, yet the Consumers' Association has done a full investigation into this and found commission received by tied advisors is often higher than IFAs.
It visited 57 financial advisors and asked the commission that'd come out of a lump-sum investment of £10,000. The highest quote from a tied advisor was a massive £740, yet the highest quoted by an IFA was £500.
My suspicion is this happens for a simple reason; the people who tend to go to tied advisers are those least likely to shop around and research the market. If they did, they probably wouldn't be going to a tied advisor in the first place plus tied advisors tend to ‘sell' much more than ‘advise', hence a good patter may just make people pay more.
Other advisors to use
IFAs aren't the only ones who talk money; if you're looking for mortgage, tax or debt advice, you need to get in touch with the right person for you.
- Never, ever, ever use a bank manager. Don't go to banks and building societies for money advice. They simply flog you their own, usually uncompetitive, products and are often incentivised for selling you debt and insurance that you don't need or want.
Don't go near them for advice; though if you're having problems repaying debts it's important to communicate it to them.
- Mortgage brokers. This is one area I really am a big fan of getting advice for, and I would tend to go for a ‘whole of market' broker, who will look at all the UK's mortgage lenders to pick the best for you. For a full guide, plus how to get advice for free, and possible cashback read Mortgages: Sneakily Get The Best Advice For Free.
- Tax accountants are often crucial and unavoidable if you're self employed, have complicated tax affairs and especially for inheritance tax advice. To find a tax accountant in England and Wales go to the Institute of Chartered Accountants or in Scotland the Institute of Chartered Accountants of Scotland
- Debt advice. Finally, if you've serious debt problems and can't afford to make your minimum repayments, the free debt-counselling services are fantastic and I wholeheartedly recommend them. For more info read the Where to Start With Problem Debts article.
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