What is a financial adviser?
A financial adviser is a professional who offers you advice and recommendations when you’re looking to take out a specific financial product, or want help planning your finances.
Most financial advisers are required to have specific qualifications depending on their area of expertise, and all are regulated by the Financial Conduct Authority (FCA) in the UK.
What does a financial adviser do?
Financial advisers generally offer advice and help you make the right decision on a range of financial products. These include:
- Financial planning
Depending on the type of adviser, and your own preferences, they may provide general advice, help you find a particular financial product, or even personally plan your finances on your behalf.
Which are the best financial advisers?
The Financial Times ranks the top financial advisers in the UK each year, based on gross and net sales and total assets under management.
According to the Financial Times rankings, the top 10 financial advisers in 2019 were:
- Quilter Financial Planning
- Close Brothers Asset Management
- Grant Thornton Group
- Wilfred T Fry
- Mazars Financial Planning Ltd
- Charles Stanley
- Progeny Wealth Ltd
- St James’s Place Wealth Management
- LEBC Group Ltd
Types of financial adviser
- Independent financial advisers (IFAs)
As the name suggests, independent financial advisers have no ties to certain financial products or services, and can therefore offer advice on all the products available on the market. This means you should be able to get the best personalised advice and products that are best suited to your financial goals and situation.
- Restricted advisers
Unlike IFAs, restricted financial advisers can only recommend a certain type of financial product, or certain providers, and therefore won’t be able to give you the full picture of your options. For example, a restricted adviser may only be able to offer advice on a certain product, such as pensions, or only be able to recommend certain providers of that product.
How do I choose the best financial adviser in the UK?
This will depend on factors like the type of advice you need, the types of investments you want to make, and your risk profile and budget. Ultimately, the best financial adviser will be a matter of personal preference, but there are a few things you should keep in mind when looking to find the best financial adviser.
5 tips for finding the best financial adviser
Do your own research and planning.
Before you even begin approaching financial advisers, it’s best to have a clear idea of your own financial goals and expectations, and the type of advice or products you need. The better informed you are about your potential options, the easier it will be to find an adviser who can help you achieve your goals.
Check their accreditation.
All financial advisers have to have minimum qualifications, equivalent to the first year of a university degree. However, advisers can also pursue further qualifications, including becoming a certified or chartered financial planner, or getting the internationally-recognised ISO22222 certificate.
Consider their character.
When you employ the services of a financial adviser, they ultimately become partly responsible for your financial future and livelihood. It’s extremely important that you feel you can trust them, and that you’ll be able to maintain an honest and communicative relationship. There are plenty of high-profile stories of people who have been misled or defrauded by their financial advisers.
Confirm the costs.
Financial advisers can charge for their advice in a variety of ways, so it’s important to make sure you’re getting the most cost-effective advice you can. If you want ongoing financial advice or planning, it may be better to employ an adviser who charges a low annual percentage fee. If you only need one-off advice, it makes more sense to use an adviser who charges a single flat fee. You’re also free to negotiate a better rate if you think they’re overcharging, so don’t be afraid to haggle.
Get personalised, independent advice.
While restricted advisers can still be of some use, it’s generally best to use an IFA, as they can provide independent advice that is tailored to your specific financial situation and goals.
How much does a financial adviser cost in the UK?
This will depend on the type of adviser you need, and the type of fee structure they use. Since 2012, financial advisers in the UK are no longer allowed to accept commission on certain products they recommend to their clients (with the exception of insurance and mortgages).
Instead, financial advisers charge a fee for their services, which is generally one of the following:
- Percentage fee. This is the most common fee model used by financial advisers, and can be anywhere from 0.5% to 5%. You’ll likely pay an upfront percentage fee when you become a client, and then an ongoing fee for each year they continue to manage your finances.
- Fixed fee. Other financial advisers will charge a fixed fee every time you require their services, which can be cost effective for those who only need sporadic, one-off advice or recommendations.
- Hourly fee. Similar to a lawyer or solicitor, some financial advisers now charge for their services on a time basis. Most will charge upwards of £50 per hour, so it’s important to make sure you’re getting value for your money.
Some studies have found customers pay typically between £1,000 and £2,500. But what you end up paying will vary based on the type of advice you need and the specific adviser you use.
Are financial advisers worth it in the UK?
This is a difficult question to answer. Some people may believe financial advisers are overpriced or ineffective, and so you’re better off making your own financial decisions. Others may see them as a vital way to save time and money, and ensure you’re making the right financial decisions and getting access to the best financial products available.
Either way, financial advisers can be very expensive, so it’s important to know that you’ll be getting trustworthy and valuable advice. There may also be certain times in your life when it makes sense to get a financial adviser, such as when you’re about to retire, or when you’re getting married and consolidating your finances.
Which bank has the best financial advisers?
Most major UK banks offer financial planning services and advice, and some may also have dedicated financial advisers or brokers that can help you select the best product for your situation. Keep in mind that advisers that are attached to certain banks may only be able to recommend products from that specific bank, and you may not receive the same unbiased advice you could get from an IFA.
As with any other type of financial adviser, it’s best to check their fee structure, whether they’re a restricted adviser, and if possible, their financial track record, before picking the adviser that is best for your needs.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
*Disclaimer: The offers compared on this page are chosen from a range of products Finder has access to track details from and is not representative of all the products available in the market. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.