There will be multiple times in your life where you’re not sure what to do with your money or what decision you need to make about your financial future. At points, we can become confused about making financial decisions, and understand what is best for our individual situations. For example, if you fall into debt, you may not know what your options are and rely on a payday loan for a quick solution.
If you have little confidence in dealing with finances or feel confused about making decisions, it may be helpful to get professional advice.
What Can a Financial Advisor Help With?
There are plenty of financial areas for which an advisor can support you with. For example, they can advise on areas such as:
- planning for your retirement
- investing or saving money
- making the most of a lump sum of money such as a redundancy payment or an inheritance
- buying a property or taking out a mortgage
- when your life changes for example, you’re starting a family, getting divorced or you’ve been widowed.
Do you need advice or guidance?
There are many individuals and organisations – often advice charities – offering financial guidance. This is different from financial advice. Where guidance provides you with information about various options available, financial advice informs you of the specific product or service that would best suit your needs. Where one offers direction, the other offers you solid answers.
For example, if you have a sum of money you wish to save, guidance will tell you about your options in more broad terms. You may be given broad information about the pros and cons of savings accounts, ISAs, and investments. In comparison, a financial advisor will look at the specifics of your options and recommend the one that suits you best.
If you are not sure whether you are receiving guidance or advice, ask the adviser or organisation to explain. If you’re looking for financial guidance you could contact a free, impartial organisation that specialises in financial guidance.
Types of Financial Advisors
As already stated, financial advisers look at your personal circumstances and your financial plans and recommend products to help you meet your needs. There are two types of financial advisers:
- independent financial advisers (IFAs) give unbiased advice about the whole range of financial products from all the different companies available
- restricted advisers give advice on a limited range of products. They may specialise in one area, for example pensions, or they may only offer advice on products offered by a limited number of companies.
Often, it’s usually best
It’s usually best to get independent financial advice so that you can look at the widest range of advice and products available.
Do Your Research
It’s important to make sure that your advisor is qualified and registers. All financial advisors must be qualified to level 4 and above on the National Qualifications and Credit Framework in the UK.
They also need a Statement of Professional Standing (SPS). This means they have agreed to work inline with a code of ethics and agree to complete 35 hours of training each year. SPS certificates must be renewed annually so check your adviser’s training is up-to-date.
All financial advisers should be registered with the FCA. This means they meet the right standards, and you get more protection if you’re not happy with the service. For example, you can complain to the Financial Services Ombudsman and may be able to claim compensation if things go wrong.