Don’t think you need to be rich
Many in the industry say that a common misconception about financial advice is that it is only for people who are well-off.
April Leeson, an adviser at the independent financial adviser (IFA) firm The Private Office, says: “Usually, the people that come to us for help are those that are at a crossroads in their life or have experienced a change in circumstances, such as with their career or retirement, the death of a loved one and/or receiving a lump sum from inheritance, a redundancy or a property sale, or simply those who want to future-proof their money for themselves or their families.”
That said, this can be a pricey business, and the costs involved will rule it out for some. Plus, advisers do sometimes refuse customers who do not have a lot of money to invest.
The consumer group Which? says you can get financial advice on a portfolio of a few thousand pounds, but finding an adviser willing to work with you “may prove a challenge”. It quotes a survey showing that the number of IFAs prepared to work with clients with less than £50,000 to invest has halved from 53% in 2019 to 25% in 2023.
Understand the options
People working in this sector call themselves by various names, such as financial adviser, financial planner or wealth manager.
Financial planners often say they look at the bigger picture and take a more holistic approach than other advisers.
The adviser’s chosen title may reflect their specialism: for example, investment adviser, pension adviser or mortgage adviser.
“Whatever they might be called, what all financial advisers in the UK do have in common is that they’re regulated by the Financial Conduct Authority,” the government-backed MoneyHelper website says. You can check if they are on the FCA’s Financial Services Register.
If an adviser deals with investments, pensions or retirement products, they will be classified as either “independent” or “restricted”. IFAs can recommend products from firms across the whole market. Restricted ones may have limitations on the type of products they offer – maybe they just concentrate on pensions – the number of providers they are able to choose from, or both.
So if you approach an adviser and it is not clear which type they are, ask them. If they are restricted, ask how many providers they have access to.
There are minimum qualifications that all financial advisers need to have. At the very least, they must have completed a level 4 diploma in financial advice recognised by the FCA. Many will have achieved more than that, such as the certified financial planner and chartered financial planner qualifications.
Ask around
A personal recommendation from a family member or a friend is one of the best ways to find a financial adviser. However, you should still do your own research – for example, checking Trustpilot and Google reviews – to get the latest on how people rate the firm and any changes that might have taken place, such as the business being taken over or key people leaving.
Some employers, workplace pension schemes and trade unions have link-ups with particular advisers, so you may want to approach one of those, and ideally talk to co-workers who have used them.
Search online
There are various websites you can try. Unbiased works with more than 27,000 qualified financial professionals – you answer a few questions, then it will match you with an adviser. Or you can use its free directory to find someone.
VouchedFor has almost 12,000 advisers on its site and shares verified reviews of advisers by their clients. You can search for an adviser’s name if they have been recommended, or look for ones in your area.
Wayfinder helps people to find certified financial planners who are local to them.
The Personal Finance Society, meanwhile, has a site that lets you find various types of adviser in your area, including chartered financial planners.
Compare costs
Advisers offer different options when it comes to paying for their services.
Many offer an initial meeting that is free of charge. After that, it can really vary, so make sure you know exactly what you are signing up to.
Those recommending things such as investments can’t receive commission from the products they sell.
An adviser may charge an initial fee, then an ongoing fee that may be yearly or monthly. This may be a percentage of your investment or a flat fee. Other charging options include an hourly rate, which MoneyHelper says can vary from £75 to £350, or a set fee for a specific job such as a pension transfer.
Which? suggests getting quotes from three financial advisers, adding: “Don’t take the fee the adviser quotes as gospel. If you think you should be paying less, discuss it with them.”
VouchedFor gives some examples of what you might expect to pay: someone wanting help investing £50,000 with ongoing advice might be looking at a total cost over five years of £3,239, of which £1,244 is paid upfront. For creating a financial plan with £100,000 of investments and ongoing service, the equivalent figures would be £7,880 and £2,849. For consolidating three pension pots worth £500,000 with ongoing advice, it would be £27,785 and £8,705.
It has been suggested that for advice on pension or retirement planning, you may be looking at needing up to nine hours with someone. But people whose affairs are simple won’t need that long.
If you feel that you don’t need face-to-face advice, an online or phone-based service will probably be cheaper. With face-to-face advice, London and the south-east will probably be pricier than other parts of the country.
Get help paying
If you think you may not be able to meet the full cost of getting advice, you may be able to get help.
The UK pensions advice allowance allows many people in defined contribution pension schemes to take up to £500 out of their pot tax free to pay for retirement advice. You can do this up to three times in your lifetime (no more than once in a tax year). However, you need to check your pension provider will let you access the allowance, as not all do.
Some companies offer access to financial advice as part of their employee benefits packages, sometimes at a reduced cost.
The government’s free Pension Wise service may be able to help if you are 50 or over and have a defined contribution pension pot (personal or workplace). It provides “guidance” – not regulated financial advice – face to face, over the phone and online. An appointment typically lasts about 60 minutes and will go through the options on taking money from your pots, the tax implications and so on – but it won’t recommend any financial products or providers or tell you what to do with your cash. After your chat, you will get a document summarising your options and next steps.
If you are under 50 or only have a defined benefit pension, you probably won’t be able to have a Pension Wise appointment but it can still offer help.
To find out more and to book an appointment, go to the Pension Wise webpage. There are only a limited number of face-to-face appointment slots.
Organisations such as Citizens Advice and some charities also offer financial guidance.
Go green
Lots of financial firms and products claim to be ethical, but with things such as investments, there’s very little agreement as to what constitutes a “green” or “sustainable” fund. If you want to make a positive change with your money, you will need to talk to the adviser about what that means to you.
There are lots of ethical advisers out there. Sites such as Unbiased let you request someone who specialises in green or ethical finance.
The ethical finance website Good With Money has named its “top nine” for 2024. They are: Jeannie Boyle at London-based EQ Investors; Path Financial, based in East Sussex; BlueSphere, based in Wigan; Surrey-based Switchfoot Wealth; Castlefield, based in Manchester; Tanya Pein at London-based In2 Planning; Ethical Futures, based in Edinburgh; Cleona Lira at London-based Conscious Money; and Amber River True Bearing, based in Lancashire.
Do it yourself?
There are lots of free or low-cost resources that you can use to create an investment portfolio. The websites of investment firms such as Hargreaves Lansdown carry articles and information about the firms and funds that they like. But this is not the same as tailored advice.
The Private Office’s Leeson says it’s “a bit like having a fitness goal – you can do it yourself if you are knowledgable and disciplined enough, but having a professional to guide you and help develop a plan based on your specific needs will likely produce a better outcome that can stand the test of time”.
