Get the facts about advice
IN last month’s article I wrote about the NEST compulsory pension scheme and said I would write some more about it in this month’s article. However, we have now had the emergency Budget which may affect the scheme. I am deferring further comments things become clearer and therefore I have decided to write about how to obtain financial advice.
The about-to-be-abolished Financial Services Authority produce a series of booklets under the general heading of Money Made Clear, and one of these is entitled Just the facts about getting financial advice. This is a very good starting point for those people who have not used financial advisers before, or just want to check on the type of advice they are receiving now.
Financial advice is based on your personal needs and circumstances, which means that you need to be prepared to answer questions about your current financial circumstances so that the advice is tailored to you as an individual. You should always deal with a firm which is regulated by the Financial Services Authority (or its successor) as this provides safeguards for you. Ask for the FSA registration number of the firm and/or the individual you are dealing with and check these on the FSA register at www. fsa.gov.uk/register/home.do
You should also check on the qualifications of the adviser who should give you a business card where these are usually shown. There are several general levels of qualifications and specific qualifications for specialist advice. Ask the adviser about his qualifications and ensure that they are appropriate to your needs.
Check whether the adviser is tied or independent. If he is tied this means that he can only recommend financial products from one or perhaps a limited range of financial providers. Advisers from banks are generally tied. An independent financial adviser is able to access products from across the whole market. An independent adviser should also offer you options regarding payment for his services, which can be fees or commission, or, a combination of the two. Do discuss and agree how payment is to be made and precisely what level of service is offered particularly with regard to regular reviews.
In addition to questioning the adviser about his qualifications and background within the financial services industry, make sure you fully understand the recommendations that are being made. Also questions are a way of checking that the adviser fully understands the product he is recommending.
Do not be harassed into signing application forms, take time to consider these properly and to ensure that you understand the product fully. Go back to the adviser with additional questions and only sign application forms when you are completely happy with the product. There is usually a cooling off period and the adviser should tell you about these, but it is better not to have to rely on these.
Oakwood Financial Services has a supply of all the FSA booklets and if anyone wants copies, we shall be happy to provide these free of charge.