Good Advice Is Hard to Find; Jane Hall Looks at How to Ensure You Get Truly Independent Financial Advice

Daily Post (Liverpool, England), March 11, 2002 | Go to article overview

Good Advice Is Hard to Find; Jane Hall Looks at How to Ensure You Get Truly Independent Financial Advice


Byline: Jane Hall

IF YOU received a five figure lump sum - from inheritance, maturing insurance policy, company share save scheme, or redundancy pay-off - would you know how to handle it?

A new car and a holiday are easy decisions. Finding expert, impartial advice on investing the rest is tricky, however - especially with 30,000 plus financial products on the market - even if you ask a bank or building society.

Millions of people unwittingly turn to their bank for advice under the misapprehension they are receiving unbiased help.

But getting independent financial advice from a bank is about as easy as getting a straight answer from a politician.

A third of people mistakenly believe their bank gives independent advice, according to a recent survey.

But unless you demand independent financial advice, you won't get it at any of Britain's main banks. Instead, you will be sold just one company's products, which may not be the best for you.

If you went into a branch of Britain's largest bank, HSBC, and expressed an interest in a stocks and shares individual savings account (Isa), you would be directed to an HSBC personal financial adviser.

They can sell only HSBC products, so you would be sold only an HSBC Isa.

But the bank does have an independent advice arm - HSBC Private Clients. If you asked specifically for independent advice, you would be put in touch with them.

Then you could be advised on any provider's Isas, not just HSBC's.

But miss out the word independent, and you will be pushed into the arms of the "tied" salesperson.

At least HSBC has an independent arm, though. The situation at other banks is more chaotic. Barclays for instance, is lining up customers for Legal & General products.

So, for example, if you needed a stakeholder pension, you would first be directed to a Barclays Life salesman who would sell you an L&G pension.

THERE is no independent advice arm at Barclays and Lloyds TSB can sell only Scottish Widows and Lloyds products.

Walk into a Royal Bank of Scotland branch and ask about investment, and you would be pointed towards an adviser who can sell only Royal Scottish Assurance products, the life assurance, pension and investment company of the RBS.

But persevere and demand independent advice, and you would be referred to Royal Bank Insurance Services, an independent financial adviser. The onus, though, would be on you to demand independent advice. At NatWest, now owned by RBS, a similar thing would happen. Ask generally for investment advice and you would be directed towards someone who can sell only NatWest and Gartmore products. But insist on independent advice and you would get an appointment with NatWest's independent financial advice arm.

It isn't only high street big names which are "tied" to providers of financial services products. Smaller firms can do the same - but must tell clients before taking them on.

HOWEVER, there are a few places on the high street where you will be offered independent financial advice. Having offered Woolwich-only products for years, the firm last summer switched to Woolwich Independent Financial Advisory Service (WIFAS), which recommends products from a panel of providers.

Bradford & Bingley has been unique in the high street for resisting ties with financial product providers since 1987.

Now B&B has The MarketPlace, launched early last year, where you will be offered independent financial advice through 800 staff at 500 branches throughout Britain.

It says that in the four key areas of life insurance, mortgage broking, investments and pensions no adviser will sell any product to boost commission.

David Fretwell, sales director for Bradford & Bingley, says B&B went down the IFA route "so we could give the customer a better choice, and obviously, if you have a greater choice of products then the customer can get a better deal. …

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