10 Questions to ask your IFA

1. Are you Independent?

At the beginning of the year, the whole industry of financial advice changed. New restrictions and regulations were introduced to improve the quality of advice received by clients. The process was called the Retail Distribution Review.

Following this there are now two classifications of firms; Independent and Restricted. To be classed as an Independent Financial Adviser (IFA), certain regulations must be complied with. They have access to all the products on the market, and must consider all options when providing advice. Restricted advisers on the other hand will have access to only a selection of providers.

2. Could you tell me what an IFA does?

Good IFAs will describe themselves as ‘lifestyle planners’ or something along these lines. Simply put they will turn you aspirations into objectives, and work out a plan to achieve them.

3. How often should I meet with you?

Annual reviews are normal. This allows your IFA to adapt your financial plan as your situation changes. Meeting less frequently may mean your IFA is not all too concerned with your long term success.

4. How do I know you’re doing a good job?

Measuring how well your IFA is doing will depend on the job you’re having them do. If your IFA is managing your financial plan, reviewing their performance against your objectives can be an indicator. Equally if your plan entails large investments, you can review growth performance against benchmark averages.

5. How do you charge?

Or rather – how do you get paid?

There are two different types of charging structures implemented by many firms. Your adviser will either agree an upfront charge for all the work they will undertake, or they will arrange an on-going fee. In some instances you can elect for your IFA to be paid via commission however this is usually only for protection policies. Either way, your initial review meeting is normally free of charge.

6. How much do you charge?

No two people have the same financial plan and likewise charges are depending on the work carried out. Unbiased.co.uk have carried out research indicating that the average IFA fee is around £150 per hour or between 0.6% and 1% of investment funds under advice, depending on the amount invested.

7. Could you describe your average client?

Different firms specialise in serving different kinds of people, so you should check your IFA is used to dealing with people in your situation. If you have a large financial portfolio you may overwhelm an IFA who is used to dealing with smaller investments. Equally, choosing an IFA with large clients may mean you’re given less attention.

8. What support functions do you have available?

IFA firms come in all shapes and sizes. Larger firms will have teams of people supporting the IFAs, allowing them to focus on serving clients. IFAs working for smaller firms, or individual IFAs, are likely to do more if not all of the support work themselves. They may offer more flexibility in their service, but may struggle to provide the same stability as a larger firm.

9. Are you Chartered? If not, why not?

Being chartered demonstrates a commitment to professional standards and continued professional development. In order to become Chartered, a minimum level of qualification, service levels and on-going training must be achieved, and then verified by the Chartered Insurance Institute. If your IFA firm does not hold Chartered status, you may want to ask why.

10. What do I do if I am not happy with your service?

A good IFA will have rigorous internal complaints procedures in place. They won’t mind telling you in detail about it, because they are confident you won’t need to use them. It is however your IFA’s legal obligation to investigate a complaint and they have up to 8 weeks to do so. After that, you can refer your case to the Financial Services Ombudsman. They are an independent regulator who will investigate the complaint from both sides and decide on a
resolution.

Don’t be afraid to ask

Choosing your IFA is about finding the right fit. By following these guidelines, you can be sure you have chosen someone who is right for you and will work with you achieve your plan.