I have had a windfall of several thousand pounds. Is it best to ask my bank where to invest it or go to an independent financial advisor?
I wonder if the bank will only push their own products?
Congatulations on the windfall!
Banks can only sell the products for which they have access, and are likely to be very restricted in their range. The products will have been provided, though, by other specialist investment providers and some are very good.
Bank staff are required to sell products and, simply because they may not have access to the full range of product types and of product providers, cannot always come up with the best solution for you. At a bank you are a customer, and the adviser is acting for the bank (though theoretically in your best interests) but if you you use an IFA then you are a client, and the IFA is by preference and by law acting for you.
I would always use an independent adviser if possible, but if the windfall is modest then the cost of independent advice may outweigh the benefits, and then the banks might be the best place for you. Whatever route you choose, look at all potential options: Cash deposits, Investment ISAs, even pensions.
Best wishes, David | 10.08.12 @ 12:19
Whilst most banks do operate an independent financial advice arm this is typically only open to those with larger sums to invest. For everyone else be very careful as banks will often be very limited in only being able to offer a restricted range of products and services, generally only from their own bank or a related sister company. In other cases smaller banks and most building societies (and now the supermarkets) have a 'tied' agreement to maket the products and services of only one financial services provider - such as the Legal and General tie up with Coventry BS group.
We are very fortunate in this country to have developed a whole support profession of independent financial advisers who - as the name suggests - are independent of any big bank or building society and who are able (and indeed required) if they are to hold themselves out as being independent and 'whole of market' to be exactly as the name suggests. I would have to ask with the choice of an adviser restricted in the products and services they can offer or someone able to look across the whole breadth and depth of what is available to find the very best - why would you even risk relying on a tied adviser (which includes the likes of St James place - all of whom are simply Appointed Representatives of a single tied commerical company)?
Most consumer champions recommend people seek out independent, rather than tied or restricted, advisers for good reasons.
Finally to be independent most advisers have learnt their trade coming up the hard way through tied and restricted offerrings before winning their spurs and throwing off such restrictions. In my view they therefore tend to be more experienced and consumer champions (I certainly felt i could not give full choice to my clients as a tied agent all those years ago).
Oh and a last thought. Do not fear that an indpendent will cost you more than a tied or restricted adviser in a bank or building society. Indeed i would suggest that the opposite is much more likely. Small local IFAs have lower overheads and leaner operations not to mention that most independent financal advisers can and do charge less. The simple obligation to search the whole market and act in the consumers best interests often means that they will be able to source better value products and services for you anyway - a win, win situation! | 10.08.12 @ 14:50