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Choosing a Financial Planner

By on February 4, 2013 in Money

Choosing a Financial PlannerWe all need financial advice at some stage during our lives and the best place to turn for that advice is often an independent financial advisor or planner. This is particularly true if you do not have the time or the confidence to research complex financial products by yourself. However, it is worth noting that all financial advisors are not the same and you need to consider several factors when choosing the right one for you.

The first question you need to answer is whether or not a financial advisor is truly independent. From the start of 2013, financial advisors officially fall into two categories, independent and restricted. Restricted financial advisors, who only recommend certain types of product and/or products from a limited number of providers, cannot use the word “independent” to describe the advice they offer. However, the fact that you are talking to a restricted financial advisor may not become apparent until you ask. Some financial advisors are categorised as “restricted” simply because they specialise in certain areas, so they may still be a good choice if you have need specific financial advice.

Truly independent financial advisors, on the other hand, are able to recommend products from the whole of the market and are free from any influence that might otherwise prevent them from recommending the best product for you. In other words, you can be confident that an independent financial advisor is acting in your best interest, rather than the best interest of any organisation(s) to which he or she may be “tied”. If you are looking for general financial advice, the fact that an independent financial advisor can recommend any product appropriate to your personal circumstances may be helpful.

Do not be afraid to shop around for a financial advisor that you feel you can work with and certainly do not be afraid to ask any financial advisor about his or her qualifications. Financial advisors typically hold a basic certificate in financial planning but, ideally, you should look for a diploma or advanced diploma in financial planning or, better still, a certified or chartered financial planner.

Until recently, financial advisors earned their money from commission they received from product providers. This was good news for consumers because it meant that they effectively received financial advice free of charge. However, since the start of 2013, commission on anything other than mortgage and insurance products is no longer allowed and financial advisors must, instead, charge a fee. Under Financial Services Authority (FSA) regulations, they must tell about their fees in advance and agree with you how you will pay them. Financial advisors are often willing to negotiate on their fees, depending on the advice you need.

If you need to find a financial advisor or planner, Simply Finance offers a searchable directory of over 25,000 financial advisors, all of whom are approved by the FSA, throughout the UK. If you have a question that you need answered quickly, you might like to try the “Ask The Expert” feature, which provides free advice from a growing network of financial advisors.

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