Want Some Good Advice? Andrew Couchman Seeks a Financial Adviser with the Morals of a Saint
Couchman, Andrew, The Independent (London, England)
AT LEAST once in all our lives, there comes the realisation that the particular financial conundrum we face needs expert help. Many of us would like to have our own financial adviser. all too often, however, the fear of being taken for a ride means we take no action at all.
In fact, any good independent financial adviser will recognise this problem. He or she should be happy to sit down with you and answer any questions you may have. Here are 10 questions to ask.
Are you tied or independent?
A key question, this will tell you whether your adviser is an independent financial adviser (IFA). If so, they are obliged to give you the best advice, which means recommending the products and services to meet your needs from across the market. A tied agent is contracted to one company or marketing group and cannot look outside their product range except for non-regulated products such as deposit accounts, mortgages and general insurance. IFAs should be able to offer you a better deal for most products but tied agents have the advantage of back-up from their employer.
Do you have professional indemnity (PI) cover?
Professional indemnity cover is essential for IFAs and means that if they give you bad advice or are otherwise held to be negligent you can sue them and their insurer should pay. Such policies have financial and cover limits and are subject to exclusions so evidence of such cover is no guarantee you would quickly be paid any compensation due.
Are you a member of a professional body?
Many advisers are members of one or more trade or professional bodies. The leading professional body is the Society of Financial Advisers, part of the 100-year-old Chartered Insurance Institute (the CII), and its full members hold the Advanced Financial Planning Certificate (AFPC) and use the letters MSFA, ASFA or FSFA after their names depending on whether they are an ordinary member, associate or fellow. The AFPC is a much tougher and more specialised exam than the basic Financial Planning Certificate (FPC). The Chartered Institute of Bankers has its own FPC equivalent examinations, though fewer advisers have chosen this route.
What qualifications do you have? The Financial Planning Certificate (FPC) or equivalent is now a legal requirement to be able to trade, and trainees without the qualification have to be supervised until they pass the three FPC exams. Other qualifications may include the higher-level AFPC, the CII's and SOFA's professional associateship and fellowship qualifications and associateship of the Institute of Taxation. Lawyers and accountants are allowed to give advice as part of their normal profession.
Can I talk to some of your existing clients?
Do not be afraid to ask to speak to one or more existing customers before committing yourself. …