What Is a Financial Adviser and Should I Be Using One?

Why Does Using An FCA-Regulated Adviser Matter?

There are times in our lives when we could benefit from additional financial advice. Whether you are just starting out on your big money-making journey, or you have been around the block a few times, a financial adviser can provide a lot of important tidbits of information that makes all the difference to people from all walks of life. We see adverts for financial advisers, and we are recommended to use their input, but we may feel put off that they only provide help for the top-tier earners. But a financial adviser is a great resource and can help most people on their financial journey with a variety of issues. They make your cash work harder for you, help you with seismic life changes such as an inheritance or a child going to university. Let’s show you what to expect from a financial adviser and why they could be the missing link between you and getting the most from your finances.

What Is a Financial Adviser? 

A financial adviser, in the most basic terms, is someone who uses their expertise and knowledge of the financial sector to construct personalised financial plans to help anyone achieve their financial goals. For example, they could help you save in a more effective manner, manage your budget, or provide insight into different tax strategies. Financial advisers are a fountain of knowledge that provides almost unlimited insight into anyone’s money situation.

When Would I Need Financial Advice?

Everyone requires some sort of financial advice at certain stages in their lives. From the time you started to learn the repercussions of spending your pocket money too soon to saving up for your first big purchase, financial advice can help shine a light. The specific help from an adviser will depend on the product the adviser provides. 

For example, if you are looking to get a foot onto the rung of investing in stocks and shares, but you don’t know where to begin, advice can help you make sense of the market, make sense of your financial goals, and provide insight into what you want to achieve based on the risks you wish to take. 

Financial advice can also help with goals that are closer to home. If you are looking into mortgage and insurance products, or a pension scheme, a financial adviser is someone to help you make sense of a myriad of terms and concepts that can seem like a foreign language to many. Here are a few examples of common financial situations you are likely to encounter, and how a financial adviser can help:

Making an Investment

From unit trusts to shares and real estate, the process of investing is a great way to make solid financial decisions. However, when purchasing financial products, they can be harder to understand than common products like ISAs. A financial adviser can give you insight into if a product is suitable for you by looking at the overall situation and assessing your risk during the fact-finding stage. They help you choose assets to create a diverse portfolio, a comprehensive investment strategy, and recommend a diverse approach to managing your money.

Buying a Home

From saving for a deposit, getting a mortgage in principle, and making an offer is a stressful and uncertain time. A financial adviser can provide unbiased information throughout each stage. They can help you understand what type of mortgage you need, how much you can borrow and can provide access to special mortgage deals that are not available on the open market.

Making a Career Change

Even if you are looking to make a significant life change, such as starting a new job, a financial adviser can help you take a holistic look at your overall career path and if it is financially sensible during this time of your life. For example, if you want to start a business, a financial adviser can give you information on being self-employed. A financial adviser can show you how to get the most out of your finances, by minimising taxation and getting more profit by claiming all of your allowable expenses and extras and claiming for higher rates of pension tax relief. 

There are a variety of financial situations where an adviser can help, including starting a pension, starting a family, planning for retirement, taking an income in retirement, and even adverse situations that take us by surprise, such as divorce. An adviser is a sympathetic and impartial adviser that is there to give you the options, whatever is occurring in your life.

What Are the Different Types of Financial Advisers? 

There are two different types of financial advisers: 

An Independent Financial Adviser (commonly abbreviated to IFA) is someone who, as the name suggests, gives advice on a variety of different financial products. An independent financial adviser is not restricted by the number of products that they are more inclined to promote, which helps you gain a perspective of the market as a whole. 

The other type is a restricted adviser, who may only specialise in one area, such as pensions or mortgages, or may only offer advice on a limited number of products provided by companies. As the name suggests, they are restricted in their support, which can mean you miss out on products or advice that you would not be aware of.

Financial advisers are not always called “financial advisers.” Usually, they are named by their specialism, such as mortgage adviser, pension adviser, investment adviser, wealth manager, and so on. 

Choosing the right financial advice depends on what you need. For example, a wealth manager can help by providing a service to customers who have agreed to have their investments or money managed. A common misconception is you need to be a millionaire to have a wealth manager, but a wealth manager can help if you have just inherited money, or looking to minimise tax on your estate so your loved ones and next of kin can get more after you have gone. 

Should I Make Sure the Adviser Is Registered and Qualified?

All financial advisers should be registered with the Financial Conduct Authority (FCA), meaning they meet the right criteria and must follow a strict set of rules when dealing with you. However, it is important to conduct due diligence on your part, so you know you are dealing with someone who suits your goals but is also accredited. Upon meeting with any financial adviser, they should be happy to provide you with their qualifications and credentials. As a rule, all financial advisers need the following qualifications:

  • Level 4 or above of the National Qualifications and Credit Framework.
  • A Statement of Professional Standing (SPS). This means they have completed at least 35 hours of professional training every year, and have signed up to a Code of Ethics. SPS certificates should be renewed annually.

How Do I Know If I Am Getting the Right Advice?

Seeing an adviser can be intimidating, especially in an area such as finances. You might think financial advisers are the type to throw a number of confusing terms at you. However, it’s important to remember that you need to be in the driving seat. An adviser needs to give you the right kind of advice for your financial needs, nobody else’s. 

When a financial adviser offers a product, it needs to follow the appropriate criteria. The adviser should recommend that a product:

  • Is affordable for you.
  • Suitable for the level of risk you want to take.
  • Allows you to take account of if you want to save in the long or short term.

If things go wrong, all is not lost. You have a right to complain to the Financial Services Ombudsman and might be able to claim compensation. If you purchase a financial product based on their advice and it proves unsuitable, you have more legal protection. If they misled you or mis-sold a product, you are protected by the Financial Conduct Authority (FCA)

Also, it is worth noting a financial adviser is duty-bound to refer you to another adviser if they cannot find a product to suit your needs. For this reason, an independent financial adviser could give you a wider variety of advice on products from the whole of the market. 

How to Pick the Right Financial Adviser

Choosing the right financial adviser is not always so straightforward. While personal recommendations can help you find the right adviser, you may not be able to work out if they’ve given you solid advice until years afterwards. When choosing the right financial adviser, you need to check if they belong to a certain union or affinity group. 

In addition, when choosing the right financial adviser, you need to ask yourself what you want out of the process. Before you look for a financial adviser, you need to work out what advice you specifically want and could benefit from. For example, do you want advice on different types of investments? Are you looking for information? Do you have spare money to invest? Or are you planning for certain events, such as education fees? When you have a better idea of what you want to achieve, you can find a financial adviser better suited to your goals.

For example, when choosing a wealth manager, you need to choose someone who is an expert in various areas, such as tax, mortgages, inheritance, and pensions. It has to be a priority to select someone for the long haul. If you are looking for someone to handle your affairs, you should establish some key criteria to help you decide if they are a good match for your needs, such as their fees and investment performance. Their “rate-card” can give you some information on their charges. However, you should also remember that a good wealth manager can protect you against bad decisions.

A financial adviser comes in numerous guises, and a financial adviser can help anybody in any stage of their financial life. Whether you are looking to squeeze every penny, or have hundreds of thousands of pounds to invest, a financial adviser can help you through every step of your journey. 

A financial adviser can make a big difference to anybody’s quality of life. Not only can they provide you with sound financial decisions, but this, in turn, means that anybody with more knowledge and experience under their belt can live a better life and make better decisions. If you are looking to get financial advice, there are many things to consider, but initial advice can come for free. Many advisers provide their first consultation free of charge, so there is nothing to lose.

Looking for expert financial advice? Get in touch to speak to an adviser

Risk Warning
Any investment carries a degree of risk and your investments may decrease in value or fail. The levels and bases of taxation and reliefs can change at any time and are dependent on individual circumstances.