What to expect from a Financial Adviser

By: Mark Hutchinson, The Personal Finance Society
15-Dec-2009

At a time when you are planning your finances for now and the future, who should you turn to for the best advice?  For people with both the time and inclination, the internet is a great resource, particularly for information. However, for the majority, seeking professional advice before acting is essential.

The value of consulting an expert can't be underestimated, considering the fact that since the State Pension was introduced in the early 1900s, a new piece of legislation has been introduced every single week!

Financial advisers study for many years to attain a level of knowledge and expertise. They have access to the latest information on what?s available in the market regarding financial products, funds and legislation.

When dealing with something as important as, for example, your pension, you need to be confident that the advice you get is the most current and appropriate and covers all the options available. This is because there are a variety of ways to fund for retirement, not just traditional pensions - and not all advice points to a product.  Equally, people might read a newspaper and be forgiven for thinking that the only way to invest is through an actively managed investment fund, while there are - in fact - other ways. Unless your research is thorough, a little information can be a dangerous thing!

Unfortunately the relatively recent history of personal finance advice has affected the level of public trust in the advice profession. Failures including the collapse of Equitable Life, pensions miss-selling and the closure of final salary pension schemes are just some of the issues that have blighted the sector. But while some people may have had bad experiences, it's not always because of their adviser. The vast majority of consumers find professional advice an invaluable component of their long term financial planning.

Nevertheless, the Financial Services Authority (FSA) has launched the Retail Distribution Review (RDR), a process aimed at restoring consumer trust in financial services.

Two key proposals of the RDR are first, removing the potential for "commission bias", so people will pay for the advice directly rather than the adviser taking a commission from the sale of a financial product.

Second, is raising the minimum level of qualification for advisers. Research by the Chartered Insurance Institute shows that consumers expect advisers to be professionally qualified to at least degree level, whereas the current entry level is just  "A" level. Of course, quite a lot of advisers are qualified beyond the minimum already and there are over 1,800 Chartered Financial Planners, which requires qualifications at degree level.

Making financial advice a more challenging profession to enter by requiring a higher level of professional expertise should give consumers reassurance that they are getting advice from a competent person. But professional standards are not just about exams. The RDR will mean tougher rules on maintaining knowledge and skills and also closer monitoring of behaviour to make sure advisers behave ethically and with integrity.

So, what can you expect in practice from an adviser?

When seeking an adviser it is important that you choose someone you feel comfortable with. Your adviser will help you plan your finances for possibly the next 30 years, so it's about building a relationship that will support you as your circumstances change. Ask friends and family for recommendations or seek a referral from another professional such as a solicitor or accountant, if you know one.

Financial advice is fast becoming a trusted profession and with thousands of advisers en route to Chartered status it is now much easier to find an adviser you can trust. Visit www.findanadviser.org  to find a trusted adviser local to you. Don't be afraid to talk to 2 or 3 before deciding - a crucial factor in a successful adviser / client relationship is good communication!

See also: Mark's tips on How to Find a Financial Adviser

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Mark Hutchinson MBA, Head of Marketing, the Personal Finance Society

Mark joined the Personal Finance Society in November 2008. He is responsible for promoting the organisation to a range of stakeholders, communicating the events and services available to members and delivering an overall membership package that is highly valued.
Mark's background marketing financial services stretches back to 1989. He has recently held senior marketing roles within AIG Life and Close Investments. Mark completed his MBA in 2002.