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Planning Retirement Online


Types of Financial Advisors

Choosing a Financial Advisor

Searching for a financial advisor will throw up a range of categories and titles that may not mean much to you – but before you make any decisions, it’s important to understand what type of advice and advisor is available to you.

This is because advisors are categorised by the type of advice they can offer to you, so some initial research is recommended. Alternatively, at the start of an appointment, it’s strongly recommended you ask an advisor about the type of advice they can offer. All financial advisors now (from 1 January 2013) have to charge a fee for investment, pension and endowment advice rather than accepting commission, though it's up to you what form this fee takes. You can either pay upfront for the adviser's time, probably around £100-£250 per hour of work they do for you, or you can agree a commission-like fee which is taken from money you invest in a product you buy through them. you will need to talk about the fee before embarking on a session with a financial advisor.

However, for mortgages and insurance advice, all advisers are still able to accept commission, so you may still be able to get this advice 'for free'. But remember, even though you haven't agreed a fee, the provider will use the money they receive from you for the product to pay the adviser.

Advisers offering "basic advice" can also receive commission. This is what you receive when you go to a bank for, eg, an insurance product, and the advice on which product to take is given depending on your answers to scripted questions about your circumstances and insurance needs.

Which type of advisor could be right for you?

Advisers now have to be clear whether they are providing you with ‘Independent’ Advice or ‘Restricted’ Advice. Independent Advice means they have to be able to cover every single product in the market (a tall order as there are 30,000 investment products alone). Restricted can mean everything from a large subset of the market (which is what a number of the big national names are doing) to a single range of products. So find out what they do actually cover and that it is sufficient to meet your needs.

Also as part of the changes all financial advisers now have to meet increased standards of qualification. All current advisers were required to obtain an Ofqual accredited level 4 qualification by the end of 2012, in order to be able to continue advising clients.

To help understand the level of difficulty regarding the step to Ofqual level 4 consider that GCSE grades between A and C are level 2, GCE A levels are level 3, the first year of a degree is level 4, honours degrees are level 6 and a PhD is level 8.

In particular a Chartered Financial Adviser is an Ofqual level 6 qualification and is one of the highest levels of qualification in the UK. You should check exactly what qualification any advisor has obtained. For this reason, and even though this site provides information rather than advice, we have prepared the information on the site with the help of a Chartered Financial Planner.


If you have already made a decision to invest in a specific product with a particular company…

…you might prefer to go direct to a restricted advisor – who can only advise on products offered by their own company (or a limited number of additional providers). It’s important to note, however, that they will only be able to recommend a limited range of products, which may not be the most suitable for your personal needs.

If you are looking to receive advice suited to your individual circumstances.....

independent financial advisors have no restrictions on the advice and recommendations they can present you. If you decide not to act upon the advice offered, you will still have to pay the up-front fee.

When making a decision, you should also bear in mind the importance of receiving ongoing, regular financial advice from your advisor; because what might be right for your needs now may not always be the case.

Independent financial advisors are likely to charge additional fees to review your investments, which could add up considerably over time. Again, you need to find out about these fees before starting a relationship with an advisor.

For more about obtaining financial advice visit

More on:
Retirement Planning - Financial advice
Inheritance Tax - Financial advice
Making a Will
Investing your money

Plus see our separate guide called Making the Most of our Money


Retirement Pension Planning - General Guidance, Inheritance Tax Planning - General Guidance , Equity Release, Long Term Care, Making a Will, AnnuitiesFinding an Independent Financial Adviser


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