Please note that this article was last updated on 13 May 2020. Any information quoted was accurate at this date.
If you’re concerned about the impact of the coronavirus pandemic on your pensions or investments or just feel that now would be a good time to review your finances, you may like to get help from a financial adviser.
Of course, with the current restrictions, seeing an adviser face-to-face won’t be possible. But many advisers are offering their services by phone or online.
We take a look at what sort of advisers there are and how to choose the right one for your needs.
Financial advisers can help you:
- if you’re nearing retirement and want to know if you need to make any changes to your retirement plans due to the impact of coronavirus on your pension.
- if you’re already taking money from your pension and want to know if you should take a different amount from your fund because of coronavirus.
- if you want advice on how to protect yourself and your family if anything should happen to you.
- if you want advice on what to do with your investments in the current climate.
- if you’re experiencing a significant life event such as bereavement, divorce, starting a family, or buying a home and want a review of your overall financial position.
- if you’re thinking of investing in stocks and shares or a pension (this could include transferring old pensions into a new plan)
- where you want advice on investment and tax planning to help you achieve your financial goals, such as planning ahead for retirement.
Financial advisers can recommend a course of action to take and particular investments and insurance products based on your personal circumstances and objectives.
Types of financial adviser
Financial advisers can offer either ‘independent’ or ‘restricted’ advice.
Independent advisers (also known as independent financial advisers or IFAs) are able to consider all types of investment products from firms across the whole market when making their recommendations.
Restricted advisers are limited to certain types of products or the providers they can choose from. For example, a restricted adviser may only recommend products from a limited number of providers. But a financial adviser who only offers advice about pensions would also be restricted, even though he or she can recommend products from across the market.
Generally it’s best to opt for an independent financial adviser. However, if you know which particular product you’re interested in or want advice on a particular product you already have, then a restricted adviser that specialises in that product and can consider products from the whole market can still be a good choice. It’s a good idea to avoid restricted advisers who work with one product provider and can only sell the products that company offers – they can only ever advise you about products from that company, even if another provider offers something that would be a better option for you.
Check they are authorised by the Financial Conduct Authority (FCA)
It’s essential to check that the adviser you use is regulated and authorised by the regulator, the FCA, using the FCA’s register. Always access the register directly from register.fca.org.uk rather than from any links sent to you by the firm itself to ensure the firm is genuine.
If you use an adviser who isn’t approved by the FCA you won’t be protected if something goes wrong. That means you won’t have access to the Financial Ombudsman Service (which is a free to use complaints service) or the Financial Services Compensation Scheme (which pays compensation if you lose money as a result of bad advice and the adviser has gone bust).
Check their qualifications
All advisers have to be qualified to what’s known as QCF Level 4 or above. They must also have a current Statement of Professional Standing which you can ask to see. With some areas of advice, for example equity release, they need specialist qualifications as well.
Ask them about their experience of advising in the area you’re interested in, what financial advice qualifications they have and how long they’ve been in business.
Choosing a financial adviser
Before you start looking for an adviser, it helps if you’re clear about what kind of advice you need. Many financial advisers specialise so if, for example, you’re looking for advice on something particular, such as pensions or income protection, it makes sense to look for someone who has expertise in that area. However, if you don’t know exactly what advice you need, tell the adviser
It’s a good idea to talk to at least three financial advisers before choosing which one to go for.
Questions to ask a financial adviser
1. What do you charge and how much am I likely to pay?
An independent financial adviser must tell you how much they charge before you’re taken on as a client (it’s part of the rules that all advisers have to stick to). The adviser might not be able to tell you exactly what you’ll pay, but they should be able to give you an indication and perhaps even an upper limit.
2. Do you have many clients who are in similar position to me?
It’s always worth finding out if an adviser has a lot of experience advising clients in a similar position to yours.
3. How risky are the investments you’re suggesting for me?
You want to understand how much risk you're taking with your retirement savings. You need to ask yourself whether you're comfortable to take this risk or not.
For more ideas of questions to ask, the FCA has a useful checklist of questions you can use.
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