5 things you need to know about good financial advice
Friday, April 4, 2014
The Budget brought plenty of good news for taxpayers, savers and pensioners with changes to ISAs, pensions, tax and children's savings allowances. If you're not sure how you can make the most of these changes, it could be time to get some help. Here are five things you need to know about financial advice:
1. If you haven't used a financial adviser for a while, you'll find that things have changed
At the beginning of last year, the Retail Distribution Review - better known as RDR - changed the way that we buy financial products and receive financial advice. This new legislation means that financial advisers are no longer paid a commission for giving out financial advice on investment products such as ISAs, bonds and pensions, as they used to be. Now, they must charge customers a clear and upfront fee.
This was designed to stop advisers recommending a product that had the largest commission, rather than the one that was most appropriate for the individual customer.
2. You now pay for advice upfront
Whether you have £50,000 or £500 to invest, if you are looking for independent advice on what to do with it, then you will have to pay for it. Your adviser will have to clearly explain how much advice will cost and together you will agree how you will pay for it. This could be a set fee upfront or you may be able to agree with them that they can take the fee from the sum you invest.
3. There are two kinds of advice (no, we don't mean good and bad)
You can choose between independent advice and restricted advice. An independent adviser can consider all types of retail investment products that could meet your needs and objectives from all firms across the market.
A restricted adviser can only recommend certain products, product providers, or both. This means they might only offer products from one company, eg the company they work for, or just one type of product.
4. You don't always need a financial adviser
If you're looking at investments such as NISAs (the New ISAs), then sometimes research on the internet and in the personal finance section of newspapers or other financial publications can be enough - but it's essential that you understand what you're investing in.
There are many experienced and knowledgeable advisers out there and if you're not 100% confident about what to do with your money, then it's always wise to seek advice. A little research around the subject first is a good idea, as then you'll know if you're getting good information.
5. There are easy ways to find a good financial adviser
It's useful to ask friends and family for any recommendations or for their experiences of local advisers.
There's nothing wrong with talking to two or three advisers before making a decision about who to go with - make sure you feel confident about their level of knowledge, not just their bedside manner!
See below for sources of further information and directories of financial advisers.
4 resources worth investigating:
Unbiased.co.uk lists thousands of regulated financial advisers with plenty of good advice on how to find the right one.
Firms, individuals and investment schemes that are regulated by the FCA (Financial Conduct Authority) are listed in its Financial Services Register.
The Money Advice Service offers, as you'd expect, lots of helpful tips about finding financial advice as well as plenty of other financial topics.
The Pensions Advisory Service provides helpful information specific to pension-related matters.
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