What’s the point of an IFA?

When reading Tax Consultant Guide articles you’ll often come across us harping on about seeking advice from a fully qualified taxation or financial adviser.

Why do we do that?

Well, we’re not financial advisers or tax consultants ourselves; we’re simply here to promote sound financial planning. To do that we like to keep you informed and up to date with the latest tax and financial news, but it is up to you to make sure that your personal financial and taxation situation is healthy and optimised, and that you are fully covered and protected.

You can find information on the Tax Consultants Guide, and to then make use of that information you are advised to speak to a professional who can advise on your personal situation and how best to act on the information that you’ve found.

That is why we advise you to speak to a tax or financial consultant all the time!

In this article we’re going to be looking at Independent Financial Advisers; what they do and how they can they help you.

There are generally 2 types of financial adviser out there:

– Advisers who are representatives of, or ‘tied to’, one company. These advisers can only advise on their company’s products which can be okay, but what if these products are not right for your personal circumstances? Well, too bad! You will either be shoe-horned to fit them or you will leave without achieving anything.

– Independent financial advisers. These advisers are free from the influence and control of one financial services company and its products; they work for you and your needs.

So, what do they do and how can they help me?

The financial services industry is a complex beast!

It is evolving and growing every day both in terms of the companies out there and the products that they offer.

How are you supposed to know what products you need, which adviser offers the best of these products and whether you’re actually getting the best deal for your money and your personal circumstance?

Well, it’s not easy – but you don’t have to figure it all out alone.

That’s where an independent financial adviser (IFA) comes into the picture!

An IFA, as mentioned, works for you.

• They can advise on the entire array of products available in the market place

• They can pick out the best financial services company to meet your needs from the myriad of companies out there and

• They can build you a totally personalized portfolio of products to cover all your needs and desires.

AND they should be professionally qualified and personally regulated by the Financial Services Authority. The Tax Consultants Guide strongly advise you to check you IFA’s credentials before entering into any contract with him.

So, how do I find an IFA?

• You can search on the left hand side of this article to find an IFA in your physical location or one who specialises in the professional areas that you are interested in.

• You can contact us and we’ll put you in touch with an IFA in your area.

• You can speak to friends, family, colleagues and see if anyone recommends a particular IFA.

Generally an IFA will come to your house at a time convenient to you. You need to find someone you are comfortable doing business with because the first stage of an IFA’s work with you will involve what’s called ‘a full fact find’.

What’s a ‘Fact Find’?

The first stage in the process of getting all your taxation and financial affairs in order for an IFA is to fully assess and understand your circumstances.

He has a liability to give you the best advice possible for your needs, to do that he has to understand you personally and financially.

A fact find is an in-depth review of your current personal and financial situation. Generally it covers at least the following areas. This is just a guide so you know what to expect when you make an appointment with an IFA. There may be other areas of questioning he enters into.

• Your personal details including age, state of health, marital status, dependants, whether you smoke, if you’ve made a will.

• Your occupation & income

• Your assets including your home and its contents, money on deposit, current investments.

• Your liabilities & outgoings including full monthly expenditure, mortgage/rent, household bills, car expenses, insurance contributions, holidays, gifts

• Summary of priorities including investments, retirement, savings, family protection in the form of life assurance and/or income if you’re unable to work, critical illness protection, paying off your mortgage, inheritance tax planning, medical and old age care etc. If you have any specific requirements make sure you make your IFA aware of them.

• Existing policies including life insurance, pensions and savings

• Your attitude to risk

Your IFA can now take this information away and build a full financial strategy, personalised specifically to you. He will be able to select suitable products from all on offer in the market place to cover the range of requirements that you have, and present them to you for your appraisal.

How much does an independent financial adviser’s service generally cost?

An IFA can get paid in commission, in fees or in both.

Any commission he earns from a financial services company by selling a product to you should be detailed to you.

Any fees are payable by you and are generally calculated on an hourly basis.

You should clarify the question of fees up front before booking an appointment with an IFA and bear in mind that the whole process cannot generally be covered swiftly in one sitting.

Furthermore, an IFA will be keen to conduct regular updates and reviews with you to make sure his ‘best advice’ continues to cover your circumstances. You need to make sure you can afford these services.

Anything else?

If you have a particular issue that you are keen to discuss with an adviser it is possible to find specialist IFAs who concentrate their advice and business in one or two areas.

Examples are mortgage or pensions specialists.

You may wish to contact a specialist IFA to cover your immediate needs in a given area, but you should still give due consideration to your overall financial health situation in the long term.

Tax Consultants Guide 2004

The tax and financial consultants guide

The material provided by Tax Consultants Guide is for general information only and does not constitute investment, tax, legal or other forms of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.