How to pick a financial adviser
In a world of volatile markets and ever-changing regulation, having a financial adviser in your corner could be a shrewd move to protect your finances and ensure that you have enough money for a comfortable retirement.
The use of financial advisers in the UK has slowly crept upwards in recent years. In 2022, 8.3 per cent of adults received regulated financial advice in the previous 12 months, according to the Financial Conduct Authority’s Financial Lives survey – up from 7.3 per cent in 2020, and 6.2 per cent in 2017.
Financial advisers can help savers devise strategies for meeting specific objectives, such as retirement planning or buying a home.
“Where advisers can add the most value is on the bits that perhaps clients and individuals don’t have that much access and understanding”, says Stuart Gibbs, chartered financial planner at Prydis Wealth.
This can include “longer-term cash flow planning, budgeting and projecting out what they may be worth in a number of years down the line”, he says.
Look to friends and family
Finding a financial adviser might seem a daunting prospect, so it could pay to look closer to home for recommendations. “Ask friends and family,” says Arthur Hill, chartered financial planner at Citygate Financial Planning.
“If they’ve got trusted relationships and get on with their existing adviser, chances are you will as well,” Hill continues, adding that savers should look for “advisers who are chartered if you can, because that’s a higher standard of professional commitment to qualifications”.
Websites such as VouchedFor, which lists financial advisers along with reviews from clients, can also be a helpful resource. The FCA, meanwhile, has an online register of authorised financial firms.
Professional contacts like solicitors or accountants can also provide good recommendations for advisers, says Rachel Meadows, managing director at IFGL Pensions.
“One of the key things in my mind…is to arrange a no-obligation initial conversation” with a prospective adviser, she says. “That no-obligation conversation is so important because firstly the adviser will be able to speak to you and understand whether they can help, and then come back to you with a proposal of what it is that they’re proposing to advise you on, and what it will cost.”
“Your adviser absolutely needs to be someone that you can work very closely with,” Meadows adds. “Some of the conversations that you’re having with your adviser are more frank and open than you’d have with most people in your life.”
Financial advice is expensive
Not everyone will be able to pay for financial advice. While many advisers will offer a first meeting free of charge, their subsequent fees can take several forms, such as an hourly rate or a predetermined fee for a piece of work, according to MoneyHelper, which lists the average hourly rate in the UK at around £150.
“There’s a lot of financial cost of giving advice,” says Daniel Payne, chartered financial planner at Golden Oak Wealth Management. “We won’t normally take on a client unless they’ve got at least £250,000 of assets under management”.
Citygate Financial Planning’s Hill also says that “financial advice is now very expensive to deliver”.
“The fees that many advice firms need to charge to cover all of their time, compliance and regulatory costs preclude a lot of people unless they’ve got significant sums of money, sort of six figures-plus,” he says.
“That’s obviously a very bad thing, because it means people are locked out from getting a high standard of advice quite often until they’ve amassed significant assets and might be further down the line in their careers, and they could have made good interventions earlier.”