What is an independent financial adviser?

Advisers can help you to understand your financial situation and provide truly independent advice to help you

Not all financial advisers are called ‘financial advisers’. Sometimes, they’re named by their specialisms (‘mortgage adviser’, ‘investment adviser’, ‘pension adviser’ etc).

The FCA defines an independent financial adviser as:

“An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives.

Independent advisers will also consider products from all firms across the market and have to give unbiased and unrestricted advice.

An independent adviser may also be called an ‘independent financial adviser’ or ‘IFA’.

What is financial advice?

Financial advice falls into two main categories – ‘independent’ and ‘restricted’.

An independent financial adviser, although likely to charge more up front, can recommend investment products from across the retail market.  A restricted adviser will only recommend certain types of product from a single or a limited number of suppliers.

The key differences between independent and restricted advisers are explained in the following table:

Why do you need a financial adviser?

There are moments in life when professional financial advice can help you make a more informed decision about your money. These include:

  • Saving for or buying a home
  • Investing
  • Getting married
  • Starting a family
  • Career change
  • Starting a business
  • Planning for retirement

There are other occasions when instead of planning proactively, you may have to react to changing circumstances. For example:

  • Divorce
  • Injury
  • Long-term illness

What does a financial adviser do?

A financial adviser’s role is to help you achieve your goals by making your money work harder for you. A good financial adviser will provide a comprehensive overview of your financial circumstances. They will take into consideration your medium and long-term goals, before advising you on the best course of action.

For many people, planning effectively for retirement constitutes a large part of the conversation they’ll have with a financial adviser. However, it’s only when your financial adviser has a clear picture of your goals that they can begin to devise a long-term financial strategy and recommend the products that will help you realise it.

Because an independent financial adviser (or IFA) can choose from the whole of the market, they are best placed to recommend the product most suitable to your personal financial needs.

The cost of independent financial advice can vary considerably depending on the level of service you need. Find out more about adviser fees here.

What services do financial advisers offer?

Financial products can be highly complex and getting professional advice on them is crucial if you want to get positive results. An independent financial adviser can help to ensure the best outcome, particularly when considering the following:

  • Pensions
  • Mortgages
  • Life and health insurance
  • Tax planning
  • Inheritance
  • Long-term healthcare

What are the benefits of using a financial adviser?

Financial advisers are regulated by the Financial Conduct Authority (FCA). This means they must stay up to date with changing regulations in the marketplace as part of their professional responsibilities.

They do the work for you

If you’re attempting a ‘DIY’ approach to your financial planning, you can spend a considerable amount of time and energy on research and paperwork. When you pay for professional financial advice, this is all part of the service.

Whole of market advice

As well as being up to date on the latest financial products and the regulations surrounding them, an independent financial adviser can search the whole market to find the best product or products to suit your needs.

Advice you can trust

Because of the ever-changing complexity of the marketplace, it makes a lot of sense to secure professional financial advice. It’s their job to get you the best deal in accordance with UK laws and regulations. That means you can be confident you’re getting the advice that’s best for you.

Key differences Independent adviser Restricted adviser
Will consider all investment products ✔︎
Can focus on a particular market ✔︎
Can consider products only from certain providers ✔︎
Has to explain to you the type of advice they offer ✔︎ ✔︎
Can use 'independent' to describe the type of advice they offer ✔︎
Incentivised to recommend one product over another

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