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PERSONAL FINANCE AND INVESTING

How to pick a financial advisor

A lot of people want to invest but feel uncertain as there is so much information out there and it is hard to wade through all the jargon and statistics. A good Financial Advisor will help you through this maze.

You could get financial advice from your bank but they are limited to advising you on their own products and this may not fit your needs. Stockbrokers, accountants and lawyers can provide advise too but mainly in their own areas of expertise. Independent Financial Advisors can advice you across a range of products that suit your needs.

1. Go where the money is and go with gut instinct. Find an advisor who has a large client  base. Make sure that they are regulated by the Financial Services Authority (FSA) or a similar regulatory body. You can check the validity of the IFA on the FSA's website: (www.fsa.gov.uk.

2. During the first meeting you should do most the talking. The advisor should spend this meeting determining what you need, your appetite for risk and your financial goals. The first meeting is usually free.

3. A good advisor should be able to explain her investment philosophy and provide jargon free reasoning on their recommendation.

4. Find out what the advisor charges. Some of them charge by the hour and give impartial advice and some of them are paid on a commission basis by the fund management companies based on the funds that you are advised to buy. The commission should not influence the IFA's advice, but it does mean that some advisors are more independent than others.

5. Decide how you want to pay the advisor. You must choose the type of advisor that you are most comfortable with. There are 2 methods of payment, either by commission or fees.

6. Hire an advisor with a strong support team. It is important to find out what support the advisor provides, if they have any administration help or if they work for themselves. This might make a difference to how efficiently your business is handled.  Larger firms will have a well-staffed research team with powerful analytical tools at their disposal.

7. Check out a prospective advisor’s background. Review their qualifications and experience of the financial markets. To be fully qualified, they must have at least 3 components of the Financial Planning Certificate or an equivalent.

8. Never hire an advisor who brags about performance. They should be selling a service not performance as this is beyond their control, and entirely dependent on the fund manager and the markets.

9. A good advisor explains the risks associated with investing. She should explain the risk and rewards of all the products that they are recommending you to invest in.

10. Keep in regular contact with your financial advisor.  You should meet with her at least once a year to review your financial circumstances and if your goals have changed. Take this time to review the performance of your portfolio and explore new developments with regard to taxes or new investment products that will complement your portfolio. Remember that they are working for you and not vice versa. If you are not satisfied, don't hesitate to change advisors.

These sites will help you to find an Independent Financial Advisor in the UK near where you work or live.

www.unbiased.co.uk

http://www.searchifa.co.uk/

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