What is an IFA and Why Do You Need One?
a) The so-called Great Transfer of Wealth where billions of pounds are shared out to (usually) the children of old fogeys like me (hopefully mine will have to wait a long time!) means that some of you will be inheriting substantial sums of money. Most will fritter it away, but the sensible ones will strike a balance between fun and future security for them and their children.b) During the probate there may well be major choices to be made about existing investments and how to deal with them, and this is not an area in which most solicitors are either willing or able tp advise.
There are three types of financial advisers, and it is crucial to distinguish between them:
- Tied Agents: these sell the products of a specific company, and CANNOT advise on competing products, which may well be more suitable. They are normally paid by commission, which is added to the product cost, so you end up paying it directly or indirectly.
- Restricted Advisers: a type of agent invented by the Financial Conduct Authority to confuse people. They are NOT independent, they have a small panel of companies they can use (with a maximum of 10) and they cannot comment or advise on other companies which may offer far better products. They are normally paid by commission, which is added to the product cost, so you end up paying it directly or indirectly. Believe it or not, some are looking for clients with a minimum of £25,000 to invest!
- Independent Financial Advisers (IFAs) recommend financial products spanning the whole of the market. This means that their advice is unbiased and unrestricted. In most cases, there will be a fee for the work, which will generally be less than the commission a tied or restricted adviser would cost you. Not all IFAs will advise on all sectors of the market – for example, Equity Release or Inheritance Tax saving schemes for High Net Worth individuals, or advice for companies. Let me know if this is the sort of advice you are looking for.
I cannot think of any circumstances where I would introduce anyone to anyone other than an Independent Financial Adviser, unless the sum concerned is perhaps less than £25,000, though I accept that on occasion, their fees may be off-putting – but you will pay more in the end using the Tied or Restricted Adviser.
If you would like to be introduced to an IFA for a no-obligation initial chat, put as much detail as you can in the form below and I will do my best to find a suitable one, which usually takes two or three days or just click this link: Find an Independent Financial Adviser local to you.
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