Choosing an Independent Financial Advisor

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What you need to know

  1. Independent Financial Advisors (commonly known as IFAs) provide independent, expert advice on a range of financial matters to their clients
  2. Some of the areas an IFA can help you with include investing your money in stocks and shares, filing your tax returns and paying tax, saving your money and getting a mortgage
  3. IFAs can also be extremely useful if you experience a major change in your life such as a bereavement, divorce or even a lottery win
  4. Note that some advisors are what's known as Restricted Advisors and can only help you with certain matters such as pensions or savings. Always be sure you are dealing with an IFA rather than a Restricted Advisor
  5. By law, all IFAs need to be registered with the Financial Conduct Authority (FCA). This ensures they are not only suitably qualified but also stick to a code of ethics. Always check to make sure an advisor is accredited before you sign up for their services
  6. Some IFAs charge by the hour and some per job; both methods have their advantages and drawbacks, so be sure to pick the best payment option for your personal circumstances
  7. Make full use of the different online databases when looking for an IFA, but also be sure to ask family and friends for recommendations and warnings

What do Independent Financial Advisors do?

Just as the name suggests, Independent Financial Advisors (commonly known as IFAs) provide independent, expert advice on a range of financial matters to their clients.

IFAs can either work for their clients on a one-off basis or on an ongoing basis and can do as little or as much as a client wants. It's worth noting that IFAs don't just offer help to consumers who lack an understanding of basic financial products; even successful businesspeople and investors turn to IFAs for impartial, expert help!

Again, IFAs provide expert help on a massive range of financial matters. Just some of the things a financial advisor can help you with include:

  • Planning your retirement, for instance by choosing the best pension for you
  • Investing your money in stocks and shares
  • Saving your money towards a long-term goal
  • Making the most of a lump sum of money, for example an inheritance, a redundancy payment or a lottery win
  • Taking out a mortgage to buy a property
  • Paying your tax or working to minimise your tax liabilities
  • Dealing with major life changes, including the financial implications of a divorce or a bereavement

Note that some financial advisors are Restricted Advisors. That is, they are only legally allowed to offer advice on certain products or product providers. So, they may be permitted to advise you on pensions but not on investments or even be restricted to recommending policies offered by just one provider. It goes without saying that such advisors may not always offer the best advice, so you need to be sure you're working with an IFA rather than a Restricted Advisor from the very start. 

Why get expert advice?

These days, a massive range of advice guides and other resources are available online, offering help with everything from investing in the stock market through to getting a mortgage. Why, then, spend good money hiring someone to advise you on straightforward financial matters?

For starters, many areas of finance are certainly complex and you will almost definitely need help understanding. Few people know how unit trusts, OEICs or even annuities work, for example, though these are all things a skilled IFA will have plenty of experience dealing with.

Additionally, it's worth remembering that few freely-available advice guides are truly 'independent'. Websites make money through directing consumers to certain product providers, meaning they will only show you a fraction of the options available. Even if they claim to be impartial, you can never be truly sure you're getting the very best deal, unlike you can be with an IFA, who is legally obliged to get you the very best return on your money.

Even if you have an excellent understanding of how most financial products work, as a consumer, you will not enjoy anywhere near as much choice as a finance industry professional. Through an IFA you could, for instance, put your money in an investment fund that is closed to members of the public, or you could enjoy a beneficial rate on a mortgage or savings account.

What to look for in an advisor

By law, all IFAs need to authorised and regulated by the Financial Conduct Authority (FCA). This means that they not only need to hold some minimum professional qualifications but that they must also stick to a strict code of ethics plus keep up to date with all the latest developments in finance, including the markets.

So, the very first thing you should do when considering an IFA is to look into their professional qualifications and experience. Things you should check include:

  • FCA Registration: Again, all IFAs need to be registered with the FCA, so double-check they are both registered and that their accreditation is up-to-date. Bear in mind that if you choose someone who is not approved by the FCA, you will have no right to compensation should you lose money due to any bad advice they may have given you.
  • Qualifications and experience: By law, all IFAs must have at least one relevant qualification at Level 4 or above from the Qualifications and Credit Framework. In addition to this, they also need to hold a Statement of Professional Standing. All reputable IFAs will be happy to show you their professional credentials, so don't be afraid to ask to see them.
  • Client feedback: If possible, read testimonials from past clients before you sign up with an IFA. Some advisors will keep these on file for you to read, though a simple online search using an IFA's name should help you find reviews of their services and help you make an informed decision.

Paying for advice

As with all services, how much an IFA charges will depend on a number of factors, including their location, level of expertise and number of years of experience. For instance, an IFA based in the City of London who has 20-year experience investing money for wealthy clients will charge far more than a newly-qualified IFA based in the north of England.

Plus, there's no one fixed way of paying for independent advice. Since 2012, IFAs have been banned from receiving commission from products providers, meaning you can be sure they are giving you impartial help. This also makes the fees charged by the profession more transparent and easier to understand.

Generally speaking, then, there are three ways IFAs can charge for their services. Which option is best for you will depend on what you need professional help for, so think carefully before you sign up with an advisor.

  • Hourly rates: This is the simplest method of charging. Just as with solicitors, lawyers and most tradesmen, some IFAs charge for their services by the hour. How much they charge will, of course, vary Some may charge £50 per hour, others may charge £250 or more for an hour of their time, so be sure to check the actual rates before you proceed and then, when you have hired an IFA who charges this way, be sure to get them to send you a full breakdown of the work they do for you and how long this takes them. Note that, if you want advice on and ongoing basis, paying by the hour will rarely work out the cheapest option.
  • Percentage fees: Though IFAs are no longer allowed to accept commission from companies offering financial products, some now charge their clients a percentage of the money they trust them with. Under this system, you'll usually pay an initial percentage charge for becoming a client and investing your money, plus an ongoing percentage charge to pay the IFA for managing your cash. Again, the rate will vary between advisors, so be sure you know what they charge from the start and, if you have any doubts, ask them to make it all clear before you proceed.
  • Fixed fees: One other popular option is to pay for expert advice on a 'per project' basis. Here, rather than charging you by the hour, an IFA will charge you for the whole job. For instance, they could charge you a fixed fee for finding you the best pension fund or for helping you draw up a plan for investing an inheritance. This can often work out more cost-effective than paying by the hour, especially if you build up a good working relationship with a single IFA and use them for multiple projects.

Finding an Independent Financial Advisor

The good news is that you will never have any problems finding an IFA. There are literally tens of thousands of suitably-qualified advisors practising across the UK today, so you won't have any issue finding one local to you. The harder part, however, is finding one that offers expert advice and value for money. So, how do you find an IFA that will offer the very best advice without costing the earth?

For starters, you should ask family, friends or colleagues for recommendations. Many IFAs get most of their clients through word-of-mouth, and even if your contacts aren't able to suggest a good one, at the very least they will help you avoid any bad ones. Use any recommendations to draw up a shortlist, but don't go on this information alone. Always do a little research of you own so that you can be confident you're trusting your money to the perfect advisor for your specific circumstances.

Once you've got your personal recommendations, then you should shop around online for an IFA, taking into account not only their rates and location but also their professional experience, qualifications and areas of expertise. Some good places to look include:

  • Unbiased: This is by some distance the best online resource for finding an IFA. Just go to the website  and you will be able to search through a database of more than 15,000 advisors. You can search by location, by cost and even by the gender of the advisor. What's more, the site carries out regular checks to ensure that all of the advisors it lists are fully registered with the FCA and don't have any black marks against their name.
  • Vouched-For: Another very popular online database of specialist IFAs is This is a great place for not only finding a local specialist but also reading reviews of their services, with the site carrying out regular checks to ensure these are posted by genuine clients.
  • Institute of Financial Planning Wayfinder: This is another useful online database of accredited financial planners working across the UK. As well as local professionals, the site also lists a number of FAQs where you can get answers to common financial conundrums, plus it also offers a range of tips and tools to help you get your personal finances in order.

Further Reading

When it comes to investing your money, there's no such thing as too much information. So, do your homework and make full use of the massive array of tools available to you, including the numerous websites dedicated to financial matters. Some of the best online resources include:

  • The Institute of Financial PlanningVisit the website to find out more about how IFAs work, how they charge for their services and how you can potentially take care of some money matters on your own.
  • Citizens Advice Bureau: The Citizens Advice website offers free information on how to get expert advice, with tips on what to look for in an IFA and how much you should expect to pay for their services. This is one website where you can be confident that the information you're getting is not only up-to-date but is also truly impartial. 
  • Financial Times: Don't just let an IFA take full control of your money. Be sure to keep up-to-speed with any investments your advisor might make on your behalf. The FT website offers the latest financial industry news and is a valuable source of information.




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