Monday, February 27, 2012

What Kind of Financial Advice Do I Need?

There are three main channels through which you can seek financial advice, and trying to work out how to get the best advice for your specific needs can be daunting. However, if you understand the difference between the three different types, then making the right choice can be much easier. If you are in need of advice on products such as pensions, savings or life assurance then the three main channels open to you are independent financial advisors, multi-tied agents and tied agents. But what is the difference between them?

Firstly, tied agents are only able to advise on the products of one provider, and are acting on behalf of the company that they are employed by or have a tied relationship with. A large number of people buy products in this manner, often as they believe that buying from a well-known organisation is a safer bet or, rightly or wrongly, that they are bound to get a good deal from these companies. Multi-tied agents operate in much the same way as tied agents, except these are financial advisers who are allowed to recommend the products of a limited number of providers - as opposed to just one. Sales staff that work at a bank or building society usually fall into this category, and many people find that it's very simple to pop into their local branch and accept what is on offer. It is worth bearing in mind, however, that in these circumstances what you are often getting is a limited amount of financial advice based on a small selection of products.

That is not the case, however, when you go to an independent financial adviser. IFAs offer unbiased financial advice to their clients and recommend the most appropriate products for you as an individual based on research of the whole market. The key here is that they are acting on your behalf - rather than observing a legal requirement to act on behalf of a product provider. You will be able to pay a fee for their advice and service or you can allow the product provider to pay the IFA by commission taken from your product. The big advantage here is that you have access to all the financial products on the market through a qualified practitioner, and you know that you are receiving the gold standard of financial advice. Only an IFA can advise on the whole of the market and act on your behalf.

As previously mentioned, many people go to tied or multi-tied agents simply because it's easy just to go to their local bank or building society branch and speak to someone that they know works for a well-known organisation; they wouldn't know where to start when looking for an IFA. The good news is that organisations such as Unbiased.co.uk have simplified this process by providing a search function allowing you to find an IFA based on location, area of expertise, gender and qualifications. Whatever kind of financial advice you are looking for, it is worth shopping around, don't just take the first option you see, take control of the process and make the right choice for you.

1 comment:

  1. The National Association of Personal Financial Advisors is a great place to start thinking about your financial position.
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