Are they independent or restricted?
One of the biggest questions to ask is whether they are an ‘Independent financial advisor (IFA)’ or whether they are a ‘Restricted financial advisor’.
If an advisor is ‘independent’ or a firm advertises that it gives ‘independent advice’, this means that it’s able to advise and sell products from any provider right across the market. This gives them access to the widest range of products and providers tailored to you.
Conversely, ‘Restricted financial advisors’ are restricted in the products and providers they can recommend to you. This restriction could mean they can only recommend products from a single company, or they could have a panel of products and providers they can pick from. The advisor should be able to clearly explain the nature of the restriction to you, and has to disclose it, but if you have any questions then you should ask them to clarify.
Whatever the type of advice – be it Mortgages or Pensions – it’s often recommended that you use the services of an Independent financial advisor as they have no restrictions on the range of products and providers they can recommend. This doesn’t mean that Restricted financial advisors are bad – some argue that by carefully screening a select range of products and providers, they are able to offer a better researched set of products, at a lower cost.
The debate over which is better has been ongoing for decades and ultimately the decision is yours. The most important thing is to make sure that you clearly understand any restrictions that the advisor has on their advice, so you can find out how this might affect the advice they give you and factor it into your decision making process.
What are their qualifications and experience?
Financial advice is a highly regulated profession and therefore financial advisors hold a range of qualifications. All financial advisors will have attained a minimum Level 4 qualification, such as a Diploma in Regulated Financial Planning. However, many specialists go above and beyond this and become a Chartered Financial Planner or Certified Financial Planner. Mortgage Advisors who don’t advise on pensions typically hold a Level 3 mortgage qualification. To boost your confidence, it’s always worth checking that any Financial Advisors you are planning on using have the appropriate qualifications.
Whilst making sure an advisor is suitably qualified is essential, it’s also worth checking that an advisor has lots of relevant practical experience in the areas that you need help with. This way, you’ll know that their skills are up to date and that they are aware of the latest products and services available in that area.