As an unpaid carer you may need financial advice .. here are some general guidelines.
Choosing An Advisor
Before you choose a financial advisor there is one important thing to remember. Ensure that whoever you deal with is regulated by the Financial Conduct Authority (FCA), which works to protect consumers from the harm that can be caused by bad conduct in the financial services industry.
To search and check that an advisor is regulated, you can use the search function within the Financial Services Register (https://www.fca.org.uk/firms/financial-services-register).
Financial advisors: what type?
If you are getting advice about investing your money, you need to know there are two different types of financial advisors. ‘independent’ and ‘restricted’ and this can affect the advice you are given.
Some advisors can offer the full range of financial products and providers available and are called ‘independent advisors’. But many advisors have chosen to offer ‘restricted advice’ and will focus on a limited selection of products and/or providers.
All financial providers have to be approved or authorised by the FCA. Both independent and restricted advisors must pass the same qualifications and meet the same requirements to ensure they are providing suitable advice.
An adviser or firm has to tell you in writing whether they offer independent or restricted advice, but if you are not sure which they offer you should ask for more information.
Independent financial advisors
An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives. Independent advisers will also consider products from across the market and have to give unbiased and unrestricted advice. An independent adviser may also be called an ‘independent financial adviser’ or ‘IFA’.
If you’re looking for general advice about your financial situation, an independent advisor would probably be best for you as they will have full access to the full range of products across the market.
Restricted financial advisors
A restricted adviser or firm can only recommend certain products, product providers, or both. The adviser or firm has to clearly explain the nature of the restriction. If you are not sure you should ask for further information, but some examples of restricted advice are where:
*The adviser works with one product provider and only considers products that company offers
*The adviser considers products from several, but not all product providers
*The adviser can recommend one or some types of products, but not all retail investment products
*The adviser has chosen to focus on a particular market, such as pensions, and considers products from all providers within that market
*Restricted advisors and firms cannot describe the advice they offer as being ‘independent’.
Financial advisors – independent or restricted – what is best?
Under FCA rules, all advisors must also ask you detailed questions (called a ‘fact find’) to understand your financial circumstances and attitude to risk. They must use this information to understand which product or products would be suitable for you before recommending anything.
Therefore, the quality of the advice you receive will be the same, whichever type of adviser you go for. The only difference is that advisors offering a restricted service may be looking at products from a narrower range. You need to weigh this up against other factors such as cost and convenience. See below for how financial advisors are paid.
Whichever type of advisor you go for; you have the rights if a product they recommend turns out to be unsuitable for you. You don’t have this level of protection if you buy without getting advice.
Financial advisors – comparing the costs
Financial advice has never been free, and, in the past, it was not always clear how advisers were paid. Commission was usually paid as a percentage of your investment, typically 1 to 8%. So if you made a £10,000 investment, £100 to £800 could be paid to the adviser. This would come out of the money you invested.
From 2013, the advisor has to explain to you how much their advice will cost and discuss and agree with you and how you will pay for it. This way you know exactly what you are paying and that the advice you receive is not influenced by how much your adviser could earn from the investment. The majority are paid by whichever company you borrow or invest from.