How do you choose a financial advisor?

[Vibing]

There is so many!! if you dont have any recommendations from friends or family where would you start?

Its finding someone to trust with big life decisions. Randomly picking someone and hoping they are alright feels like gambling

Unless you can find one with a crystal ball then they are a waste of money. You can do all you need yourself with a a little bit of reading on the internet.

What do you want them to do that you can’t?

If you think about your wider network would there be people who’ve used them? Ask around - get at least 3 recs, check them out, and ask to speak to a couple of clients.

Otherwise google, pick 5 with good reviews and the right qualifications, meet them, shortlist to 2 or 3 and speak to 2 or 3 clients of each to make a decision

What exactly are you looking to use them for?
You can do it yourself if you read around the subject and you’ll understand so much more about finances and investing this way

I think PPs are right, if you don't have a huge amount that needs advice - say sub £100k - then you can probably have a look on the internet, have a think about what you need the money for and when, and work out a plan for yourself.

If you have more than that, I'd say IFAs become increasingly useful. They have some great cash flow modeling software that will show you how far your money will stretch, and can help you plan for certain life events (new house, kids at university etc) as well as helping you decide where to invest.

How to choose one is tricky. Do you have a solicitor? They will usually have good contacts in the local market if you ask them. Or just have a look a websites/ring a few and see who you like. Having someone you like and want to work with is a significant part of choosing professional advisors. Oh, and as a general rule, don't use St James' Place!

I don't completely agree with PPs. Yes, you can read up on the subject and make some good investment decisions. But you've likely not got the time to keep up to speed with whether your investments are working as well as they could and what new is out there etc. They are living and breathing this stuff and have experience you can't possibly have. I do agree it depends how much you are talking about though as to whether it is worth it.

We've used two FAs in the past, both highly recommended by friends. The first retired, we managed things ourselves for years. Engaged another FA ) who reviewed everything and showed us how the investments we'd made were not performing as well as they could have done invested elsewhere so it was worth every penny we paid them.

I used unbiased to find mine.

It also depends on what advice you need. I tend to recommend using a chartered financial planner rather than an IFA as they do more than look at simple investments, I.e. they can look at wills, inheritance tax, trusts, passing assets to next generation etc., I.e.a more rounded approach to all your finances.

Ive got one as a client and I am referring more and more clients to him, even for things like inheritance tax advice, as he lives and breathes the bigger picture and can really come up with some good ideas that I hadn’t thought of despite tax being my profession- he does as much consultancy and advice work re general finances as he does re investment advice.

We have complicated finances - we run a company, needed to explore all options for lifetime-limit on pensions, capital gains, income tax, dividends etc. We had done our research - needed someone to double check our thinking and suggest improvements not pick investments. Paid an hourly rate rather than percentage, we used a friend’s very boring and sensible brotherinlaw and he was very useful indeed.

How do you find a financial advisor happy to work on an hourly rate? I’ve become frustrated at trying to find one.
Every one I’ve contacted work on a % basis

It was the only way we would do business - we used a small financial services company, they provided tax advice etc so we were able to tap into their specialists across the company. But also we explained what we needed and they said it would take 1-2 days of research to check through our details, we were comfortable with that. We worried that a percentage of our total assets would have been obscene and we didn’t want to incentivise a movement of assets unless there was a bloody good reason - so commission would not have suited. My friend’s brother in law was a partner - so could have been a favour.
We tried a recommendation by another well respected friend who to be fair would rather not spend time thinking through finances but when we met him, dh and I both thought he wasnt the sharpest tool and couldn’t deliver what we wanted. I’d keep asking and looking.

Unless you are really wealthy I don't think it is worth it, they would cost as much as they might save you.

What do you want advice on? It's a big subject and some things are easier to manage yourself than others.

www.vouchedfor.co.uk/ is a good place to start. VouchedFor checks and verifies reviews for IFAs.

Horses for courses. You could say that about anything really.

Some people service their own cars, most use garages. Some people do their own DIY, other people use tradesmen. Lots of people engage gardeners and cleaners, but "could do it themselves".

Not everyone has the ability, time nor inclination to do the research they'd need to do to get the same level of financial advice they'd get from an IFA.

I'm an accountant. Lots of my clients "could" do it themselves, but they choose not to and pay me instead. Some sway in and out between years from using me or doing it themselves, depending on how much time they have spare and whether there are any complexities in a particular year, such as capital gains tax, or if they want an IHT update review.

What I'd say is that level of "wealth" isn't really the determinant factor. Lots of very wealthy people can manage their own finances especially those with time on their hands after retirement or selling a business, and lots of relatively "poor" people (compared to the very rich) use IFAs especially if they are young, have families, working full time, etc., and simply don't have the time or headspace to start doing hours of research.