Are IFA's (independent financial advisers) really impartial and do they offer good advise?
Answers:
I have an excellent financial adviser and believe he gives sound independent financial advice.
How do you find one that you can be sure of:
- ask for recommendations from friends.
- ensure they are not linked to one particular 'product' e.g. one bank etc
- look at their terms of business that they should ask you to sign when you ask them for advice.
- although they work on commission this is changing as some concerns have been raised about whether they might be influenced by the amount they will earn from the product. So you can ask them to quote you on products which earn them commission and ones that you have to pay for the product directly. If they won't do this then there is something dubious about that.
- Ask them for the reasoning behind selecting a particular product - they may recommend a more expensive one because the customer service and pay out on policies is much better. A cheap product may mean that you don't get what you want when you really need it.
You get good and bad people in any industry but IFAs I know of are very good.
They are strictly regulated by the Financial Services Authority, they are meant to be impartial, but remember, they earn some of their living from commision
Typically no. They will usually steer you towards their company's products because their comissions are higher when you buy them. Their advice may be okay, but it will never really be objective.
I suggest doing your own research.
They are foremost and primarily salesman. This is an issue I'm struggling with myself. Some of the products they have to sale are valuable and how does someone who is financially naive weed that all out from the stuff they just want a good commission on. I don't know either, but they are most definitely not impartial, the quality of the advise depends on the person.
My Dad is a IFA and i know he always find the best offer for his clients. He has also helped me and a few of my friends in getting a mortgage (all first time buyers). All happy with what he and his company did.
The good ones affiliated to FIMBRA are. Having said that - if they clinch a deal for you (Mortgage, Insurance etc) they'll take any new business commission from your new lender, insurance company. If you'd done your own research etc. and arranged your own deal - any perks would come to you instead. Basically an IFA is there to save you time and effort. I think they're pretty good - but of course they're in the business to make money.
Having said all of that the actual advice is completely free for you to accept or reject.
They are not impartial, they will steer you towards the funds that have high commisions on them. I took my money away from Edward Jones because they were trading and having me sell funds that did not need to be sold just so they could make money on the sales and transactions. Go to TD Waterhouse, their financial managers are paid by the bank so they can concentrate on getting you the best deals for your money without worrying about their commisions.
they often run their own business or work for a business that derives its income from commissions. They can therefore never be 100% objective, it's the way in which the system works.
They are heavily regulated however and all off their marketing material has to be pre approved.
There could be a code of ethics. The regulating authority is the fsa at http://www.fsa.gov.uk
According to the Which consumer report out this month - it can be very hard to find one who is genuine, offers good advice and finds the best deal. Over 50% of the IFA's secretly tested 'failed'. Personally I find a mixture of IFA and own research works well. Look around yourself, ask an IFA, see how the two tally. Then research their suggestions e.g. if they say you need a bond at this rate, do an internet search and see if you can beat it. If you can beat it or match it then their service isn't great! It should be worth seeing them for you.
Try a hybrid service: Where you can explore the products that are used to meet your long-term goals and objectives without a face to face meeting or phone call. Do all your research through the website & email and then contact for advice/purchase.
The best place to go would be an independent professional or a service that provides access to the majority of annuities available on the market and allows you to compare some of these Annuities online 24/7 before you make contact with them. One of those professionals/services is http://www.jdsannuities.com/annuity_rate. . Go and see the difference! Explore the entire website.
NO, NO. Here in UK, in most cases IFAs work on commission and naturally favour the products and companies that pay them most.
The best way is to agree payment by the hour, but it then becomes expensive and you still have to be careful they do not get concealed rewards. Nevertheless if your problem is complicated, they are necessary.
I have been a financial advisor and a stock broker for 15 years. My experience is that the vast majority of financial advisors are honorable and truly looking out for their clients. There are a few bad apples in every crowd. It's quite irritating to hear all the typical stereotypes that come out anytime a person asks a question like this. They're just salesman, They're up to no good, They will try to steer you to high commission products. blah blah blah. The fact is that there is nothing that a financial advisor does that you could not do yourself if you had the time, education, and desire to do it. The same can be said of real estate agents, lawyers, and to some extent doctors. The truth of the matter is that most people lack either the time or the desire to do the work that would be necessary to be properly educated in the area of personal finance and investing.
To answer your questions. Most are impartial and most do give good advise. Now you have to do your homework and ask the right questions to determine if you're talking to a good one.
I would recommend using someone who is a CFP or CFA. These are professional certifications that indicate that he/she is not a rookie. I would ask him/her how they are compensated. The will typically be a fee only advisor, a commission only advisor, or a combination of the two. The fee only guy will charge you a sizeable up front fee to hire him. He will perform an evaluation on your financial situation and then he will typically send you out with the plan that you will have to implement on your own. The commisssion only guy does not charge you an up front fee. He will typically perform an evaluation and then will want to implement the plan for you so that he can be paid a commission based upon the products that he sells to you. The combo guy will collect a small fee relative to the fee only guy and then do an evaluation on you. He will then want to implement the plan for you to collect commissions or additional fees. All three of these types of planners have positives and negatives. You have to meet the people to determine which of these guys works best for you. Try to find a friend or family member who is currently working with someone who they like and trust and start there with your interviews. Take the approach that you are hiring someone during the interview. At the end of the meeting decide if this is someone you feel comfortable with and go with your gut. Good luck to you. I hope that you're not too easily pursuaded by anyone giving you advice on yahoo answers. (including myself)
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