Q. I’ve been doing some online research as I want to use the services of a professional to help me make some important financial decisions. However, there are so many different types of ‘adviser’ that I’m unsure who to turn to. Can you explain how it all works?
A. You’re quite right, it can appear to be confusing.
By our definition, there are two different types of service that differentiate ‘advisers’. Which type you require will depend upon what you’re looking for.
The first is the Financial Adviser. The service offered is traditionally a product retailing service and the adviser will usually earn their money (commission) from the provider of the product that they recommend.
This type of adviser can either be tied to one product provider, they can be multi-tied (which means they can recommend from a limited number of providers), or they can be independent of product provider known as whole of market).
The important point to remember is that this type of service is focussed on helping you buy (or be sold, depending upon which way you look at it) a product. If that’s all you require then I recommend you deal with a whole of market adviser. It really makes no sense to use a tied or multi-tied adviser (even though they’ll try to convince you otherwise!).
The second type is the Financial Planner. The types of service do vary, but the basic premise is that a good financial planner will work with you to help you define the most important goals that you want to achieve.
They will then create a long term financial strategy for you to adopt, taking into account your current assets/liabilities and your attitude to risk.
Once you have agreed on your strategy, the summary of this will be produced in writing for you. You can then review it at any time to remind yourself.
You should then review your progress each year as the assumptions(inflation etc) will change over time and these will affect your plan. Similarly, your goals are likely to change as well.
Expect to pay a good financial planner a fee for helping you create your financial plan. One crucial difference between a Planner and an Adviser is that the Planner may not recommend any new financial products as part of your financial strategy. In turn, this should give you confidence that the service being provided is totally impartial.
Good luck with your search!
