Independent financial advisers

[Happytosseyouafteralltheseyears]

I need to consult with one but the last adviser tries to sell me a policy which was completely ridiculous! How do you know if they are truly independent?

"independent" does not necessarily mean "good". Some "independent" ones charge enormous fees. Some restricted ones may be able to offer lower all-in fees, and if the funds they offer are reasonably good funds, that could end up being a better deal.

Regardless of whether you could consider restricted advisors or not, in addition to knowing whether someone is independent or restricted, you will want to find out what are all of the fees you would pay. You will want to know the entire fee stack:

1. advice fee paid to the advisor. Can be an upfront amount and additionally an annual amount.
2. fund fees paid to fund managers managing the funds into which the advisor puts your money
3. platform fees plaid to whatever institution has custody of the assets. Some platforms have different (often higher) platform fees for "advised assets" because they provide a service to the advisor (and you pay for that service).

It is not necessarily wrong to have all of these different parties get paid something - they are all providing different services. HOWEVER, unless all of them are charging low fees, it really adds up to be too much. In the worst case you could end up paying over 1% to the advisor, plus close to another 1% for the fund fees, please 1/4 to 1/2 of a percent for the platform - adding up to 2.5% or more of your money every year. That is just too much: after taxes, inflation and fees you would have a good chance of ending up with a negative "real" return.

What type of service are you looking for from an IFA? They're only allowed to charge commission on certain products such insurances (life, critical illness, income protection). It's possible to use a comparison website to give you some idea of costs and types.

If you're looking for investment advice or pensions they must charge fees rather than commission to reduce the conflict of interest. They can (and often do) charge ongoing fees for investment advice. However, some IFAs provide a one-off fixed fee, agreed in advance dependent on your financial situation. They don't charge commission or ongoing fees for products. Upfront fees are usually higher for this service than with ongoing fees, but can be more affordable in the long run.

If you're a member of a trade union (and some professional bodies), you might find they provide access to financial advice. They often partner with FCA regulated financial firms to give advice on pensions, investments and mortgages as a member benefit. If you're not a member but have the option to join one, it might be worth considering for this benefit alone.