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Safer Investments: Choosing A Regulated Financial Adviser

12 November 2015 - Posted by alight

What is an IFA?

An IFA is an Independent Financial Adviser, and is best suited to giving advice related to Investments & Pensions. An IFA will tailor their advice for you from the whole financial market, as opposed to a Restricted Financial Adviser, who will only recommend specific products. Money Saving Expert states that in the long run, seeking advice from an IFA may save you money, especially when it concerns pensions and your retirement. This all seems very straightforward, but how do you know your adviser is legitimate?

Choosing an IFA doesn't have to be daunting for the financially inexperienced or uninitiated. We've all heard horror stories of consumers being ripped off by rogue traders, in some cases losing significant portions of their estate to poor investment decisions or fraud, but the fortunate reality is that finding a genuine financial adviser and being protected from malpractice is not challenging.

Top tips:

  • Avoid rogue advisors by choosing regulated and reputable firms
  • Use an adviser on the financial services register to get consumer protection
  • Ask questions: a genuine adviser will provide full transparency

Find a regulated adviser

Consumers of financial services in the UK are generally well protected by regulatory authorities and other independent bodies such as the Financial Conduct Authority (FCA) and the Financial Services Compensation Scheme (FSCS). All firms that provide financial services, including IFAs, must be authorized by the FCA to conduct business and meet a strict set of standards designed to ensure fair treatment of customers.

Choose an IFA that is authorized on the Financial Services Register. This is a safe way of finding an IFA, automatically granting you financial consumer protection through the FCA. A firm can be authorized but suspended from trading, so make sure you choose a firm that is not suspended (see below).

  An example of an FCA authorised firm

An example of a fully authorized firm (status – 'Authorised')

  An example of a firm suspended by the FCA

An example of a suspended firm (status – 'Authorised - suspended')

Some reputable, regulated firms may not appear directly on the register, however – these firms will belong to and are regulated by an IFA network, an association of IFAs which itself is regulated by the FCA. In this situation, it is the IFA network that will appear on the financial services register.

Beware of fraudsters – in all cases make sure the details given to you by a financial services firm match the details on the financial services register. The FCA provide some helpful steps to make sure you avoid unauthorized firms.

Get to know your adviser – find a good match for you

Certification to a minimum standard is required for authorization to trade by the FCA – financial certification comes in many flavors, however, some of which will be more relevant to your particular investment requirements than others. For additional peace of mind, a list of FCA approved qualifications is available to view online.

  The FCA approved qualifications

Snippet from the FCA approved qualifications table

Certification and FCA regulation is a good indication of professional competency and provides a certain level of consumer protection in the unlikely occurrence of unfair practice, though it is not a guarantee that particular IFA will be a good match for you. Recommendations from friends and family, especially those who have solicited the services of their IFA over a considerable period, are a good place to start.

Be sure to arrange a face-to-face appointment with any potential advisers and use the opportunity to get a feel for the individuals and their firm – avoid any IFAs that aren't willing to dedicate their time to discussing your financial situation and investment requirements. At your appointment, ask to see an in-date statement of professional standing (SPS). The SPS is a document issued annually by an IFA's regulating body, a confirmation of their current good standing with respect to the standards set by regulator and the FCA.

Ask questions about the investment process

Don't be afraid to ask any questions you have about the investment process, including the risks involved and any fees payable to the IFA. Avoid business with any IFAs you feel are withholding answers to any questions you are asking and intend to choose a firm who provide full transparency about your investment – you have the right to know exactly what is happening with your money.

Dos and Don'ts

Do:

Don't:

  • Don't choose unqualified or unregulated advisers
  • Don't trust advisers that don't offer full transparency of your investment details
  • Don't work with advisers that won't dedicate time to discussing your investment requirements

At Campbell Harrison, all of our advisers are authorized by the FCA and will tailor our advice to suit your specific needs. Our main aim is to empower you to make well informed choices for your finances and the first consultation is free.

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