Money

Five things to consider when looking for financial advice

7 min read 17 May 23

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Summary

There’s no doubt that getting financial advice can make a real difference to your financial situation and long-term goals, but it can be hard to know where to start or what to look out for.

We’ve put together some key things to think about when it comes to accessing financial advice.

Are you looking for guidance or 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 organisations or charities, for example, the Citizens Advice Service or Money Helper. Guidance provides you with information about the various options available to you but should not recommend any particular option over another. Guidance is not regulated and its aim is to ensure you have the facts, so you can make an 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 advice is regulated by the Financial Conduct Authority. It’s provided by an individual or organisation that must meet certain qualifications and rules before being able to deal with you. As financial advisers are qualified experts they will charge for financial advice, like any professional service. The amount will depends on your needs and circumstances and your chosen adviser but they will always talk you 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.

How complicated are your financial needs?

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 an ISA to save monthly or deciding how to take an income from your pension? ISAs are usually quite a simple financial decision, whereas when taking money from your pension there is a lot to consider, as 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.

Types of advice and how they differ

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 is a low-cost digital 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.

You can read more about each of these types of advice and decide which one might be right for you.

Do I want independent or restricted advice?

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 advisers offering a restricted service may be looking at products from a narrower range. As the name suggests ‘restricted’ means the advisers can only recommend products from certain providers. 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.

Are you considering one-off advice or ongoing advice?

Some people look to get ‘one-off help’ from a financial adviser on a particular issue. The financial adviser and the client will usually agree a one-time fee for this but no ongoing charges. 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’ll always discuss them with you upfront before going ahead with anything. They’ll also show a list of the fees to you in writing so you can take time to consider whether you want to proceed.

Remember, it’s always important to review your investments and check they still suit your needs, whether you decide to do this yourself or have the help of a financial adviser.

Reviews and recommendations

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 like Trust Pilot or Vouchedfor that publish recommendations or feedback on financial advisers.

Sources of help

These are just some key areas to think about, and this is not advice to a particular course of action. But if you have decided financial advice is right for you then you can find an adviser here.

Alternatively you can get more information about managing money and a host of other topics on the Citizen Advice Service website.