Financial advice explained Financial advice: what it offers
As your life progresses, you're likely to need different financial products to suit your needs. Junior Isas for children, saving for a house deposit, getting a mortgage, preparing for retirement – each stage of your life can benefit from a financial product. That's why choosing the right financial adviser is so important.
This guide explains what financial advice can offer you and the types of products on which you might receive advice.
Is it worth taking financial advice?
Financial advisers provide guidance and recommendations on complex financial products. These include:
- Life and health insurance
- Tax and inheritance planning
- Mortgages and equity release
- Long-term care planning
If you're looking for something pretty straightforward such as a savings account or cash Isa, the Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a good home for your nest egg.
But for more complex products like pensions and investments, getting expert advice can be crucial, so that you don't end up with something unsuitable. That's where a financial adviser comes in. A financial adviser knows the market, so can shop around for the best deal for you. They can also save you money by selecting the best deals.
Financial advisers are regulated by the Financial Conduct Authority (FCA) and have a strict code of conduct and rules to stick to.
What do financial advisers do?
You'll start with an introductory meeting, where the adviser spends around an hour finding out what you’re looking for and explaining their services. They should also give you something called a 'key facts document', outlining their fees and what you can expect from your relationship.
If you are happy to use the services of a financial adviser, they will carry out a 'fact-find'. This provides the adviser with information about your finances, goals and attitude to risk. They'll use this to recommend suitable products to you. This will be followed by a full financial plan, including product recommendations and any tax benefits available to you.
Once you have agreed with a financial adviser's recommendations, and the cost of using his or her services, the plan that they have put forward will be implemented. You may get the option of an ongoing review.
It's essential that you find the right adviser to meet your needs. Read our guide to finding a financial adviser to find out more.
Can I still buy complex financial products without a financial adviser?
Investing your money is a complex business, and you're putting your cash at risk, so many investors prefer the peace of mind that comes from receiving advice. But if you feel confident enough, there are many services and products that can work for DIY investors.
- Fund supermarkets – these are online shops that allow you to buy investment products directly. By foregoing a financial adviser you can cut the costs of investing. For more on the leading brokers in the market, see our fund supermarket reviews.
- Self-invested personal pensions (Sipps) – using a fund supermarket or pension company, you can build up savings for your retirement in a product that gives you access to a wide range of investments and the tax relief that is provided to all pension savers. Learn more in our guide to Sipps.
- Building a portfolio – Which? has developed a unique set of investment portfolios that can help you pick the right mix of investments based on how much money you're comfortable losing. Use our portfolio builder tool to find the portfolio that hits your needs.
- Life insurance – You can get cheaper premiums by buying life insurance through a broker. Learn more in our comprehensive guide to guide to buying life cover.
What if things go wrong?
Financial advisers are regulated by the FCA, and this gives you access to redress should anything go wrong with your advice through the Financial Ombudsman Service (FOS).
This means that you can complain to the FOS if you're unhappy with any advice you've been given or if you think you've been mis-sold, and the FOS will take the appropriate action – for example ordering your adviser to pay compensation. The FCA has the power to fine financial advisers who have broken regulations.
Remember, when it comes to investments, you're not covered if your investments lose you money - that comes as part and parcel of putting your money on the stock market.
- Call The Which? Money Helpline – for expert help on finding an adviser
- How to complain about financial services – if you think you've received poor advice
- The Which? portfolios tool - get the right mix of investments for your financial goals
Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.