Where to Get Reliable Investment Advice
There are two kinds of financial consultant — independent financial advisers (IFAs) and tied agents — both of whom sell mainly life insurance and related investment products, such as unit linked savings plans.
Independent financial advisers
IFAs must survey the whole marketplace to find the best product to suit your needs. Most are paid commission by the companies whose products they sell, but some charge a fee instead. If you are charged a fee, make sure the adviser deducts any commission he earns first.
Attached to one insurance company, tied agents are paid commission by the insurance company and don’t normally charge a fee.
If you want to use a tied agent, always check they are still connected with the life insurance company they claim to represent. You are not covered by the Financial Services Act if that connection has ended.
Banks and building societies
Banks and building societies will give financial advice on a commission basis, but most are tied to just one life insurance company. They may also have a separate in-house company offering independent financial advice. This service is not often promoted and is not usually available in the branches. If your bank or building society also gives independent financial advice, ask for the appropriate address and telephone number.
Some solicitors can give financial advice, but they must say so prominently on their writing paper and in their offices. Solicitors cannot be tied to any one financial services company — they must give independent advice — and most charge a fee.
If you use a solicitor when buying a house or making a will, find out if he is authorised to help you in other ways. You may need financial advice at both these times.
Many accountants are authorised to give financial advice, and they must not be tied to a single financial services company. They charge a fee for their advice. If you don’t want a written report, you can ask an accountant to give advice by interview. This can be a useful way of reducing the cost.
The main function of stockbrokers is to buy and sell shares, but many also give advice on all aspects of financial planning, from unit trusts to life insurance. Many stockbrokers, especially those in central London, may only agree to take you as a client if you have £25,000 or more to invest.
What to do if you get into debt
• Contact the companies you owe money to and see if they are prepared to accept lower payments until you get back on your feet.
• Don’t borrow your way out of debt as you are likely to end up borrowing money at expensive rates of interest.
• Check you are getting all the state benefits that you are entitled to.
• Contact your local Citizens Advice Bureau — they may have a specialist money adviser — or ring the National Debtline on 0808 808 4000 (Address: National Debtline, Tricorn House, 51-53 Hagley Road, Edgbaston, Birmingham B16 8TP).
How to Complain About Bad Advice
There are official ombudsmen and complaints services available for the whole range of financial services, but don’t try to use them unless you have already raised your complaint with the company concerned. No ombudsmen take on a case until they are sure you have exhausted the company’s own complaints procedure.
If a financial services company goes bust, you are entitled to compensation. There are various compensation schemes that cover areas such as pensions, investments or solicitors. The Citizens Advice Bureau may be able to help.