Five things to consider when looking for financial advice

While these terms are often used interchangeably in general conversation, they do mean different things when it comes to your financial planning.

Financial guidance is usually free and given by government-backed organisations or charities, for example, MoneyHelper or Citizens Advice Service. Guidance provides you with information about the various options available to you but will not recommend any particular option over another. The aim of guidance is to ensure you have the facts so you can make a more informed decision.

Financial advice involves looking at your personal circumstances and tailoring recommendations based on your needs and goals. A financial adviser will generally ask you detailed questions about your savings and financial goals for the future, then help you put plans in place to achieve these goals. Financial Advisers must achieve certain qualifications before being able to give advice. They will charge for their advice, like any professional service, but they should talk through the charges before you agree to go ahead with anything.

Looking at this in practice, if you’re about to retire and thinking of taking an income from your pension, financial guidance would present you with the various options and the pros and cons of each, leaving you to decide. In contrast, if you spoke to a financial adviser with the same question, they would look at your individual needs and circumstances, and then make specific recommendations tailored to you, explaining why those suggestions are best for you.

It’s good to think about how complex your financial requirements are and whether this might influence the level of advice you need. For example, are you setting up a cash ISA to save monthly or deciding how to take an income from your pension? Cash ISAs are usually quite a simple financial decision, whereas when taking money from your pension there is a lot to consider and some decisions can’t be reversed.

Your advice needs can change during your lifetime, so you may choose different approaches to getting help with financial matters at different stages of life, or as needs require. Some common events that often motivate people to seek financial advice are life changes like marriage, becoming parents, buying a house, funding education for children, nearing retirement and inheriting money.

There are different ways to get financial advice – it’s no longer a ‘one size fits all’ situation. With more options than ever before, you have greater choice for how you access financial advice and at a wider range of costs. The three main ways are:

Robo advice – this can be a lower cost service that uses technology to automate investing. You’ll be asked some basic questions and based on the answers, the computer software will use an algorithm to suggest an investment strategy.

Hybrid advice – Hybrid advice usually combines automated digital tools with oversight by a financial adviser.

Traditional advice – Traditional financial advice usually takes the form of a financial adviser talking you through your needs and supporting you at every stage of the advice process.

Firstly, independent and restricted advisers essentially do the same thing. They both provide expert advice to individuals and businesses on how they can reach their financial goals. All financial advisers must have a minimum standard of qualifications and are regulated by the Financial Conduct Authority, regardless of whether they are independent or restricted.

The only difference is that restricted advice is where the adviser can only recommend specific products, certain product providers or advice in one specific area. Independent advisers can recommend any product from any provider. 

However, all advisers will ask you detailed questions so they can get to know your personal circumstances before recommending what’s right for you, so whether they are restricted or independent this doesn’t impact the quality of service you should receive.

Some people look to get ‘one-off help’ from a financial adviser on a particular issue. This would involve a one-off charge for this advice. For example, you might be looking to take out a trust but nothing more, or you may want to check your investment portfolio has the right level of risk for you – but then you’re confident and comfortable managing it yourself.

Ongoing financial advice means your financial adviser will be on hand to review your plans and situations, as and when things change. Even if nothing has changed, you’re likely to have annual reviews to check your investments still meet your needs. Financial advisers usually take an annual fee for this ongoing service and it is usually deducted from your overall investment with the adviser. 

Like any service, different financial advisers will charge different fees, but they should always discuss them with you upfront before going ahead with anything. 

Please remember whether you use a financial adviser or not it's always important to review your investments and check they still suit your needs. As with all investments they can you down in value as well as up and may be worth less than you put in.

It’s always helpful to read reviews and get recommendations from people you trust. So, it may be worth asking your family, friends or colleagues if anyone has a financial adviser they’re happy with. While your needs are unlikely to be exactly the same as someone else’s, getting recommendations is often a good place to start. You can also look online at many sites for example, VouchedFor that publish recommendations or feedback on financial advisers.

If you'd like to speak to one of our advisers to see how they could help then simply click the button below to book a no-obligation chat.