What Does a UK Independent Financial Advisor Do?

By : Nick
|
August 8, 2022

Investing in the UK property market has always been an attractive proposition one of the attractions of property is that it is a physical asset but is it the best investment compared to shares? Is UK property still a good investment in 2022? The best way to truly answer this question is to receive unbiased independent financial advice

Independent financial advisors (IFA) help their clients by giving unbiased advice based on what they need, not what they can sell. An advisor will look at all of your circumstances and recommend a course of action which is right for you.

So what exactly does an IFA do and why do you need one? Read on.

Who are Independent Financial Advisors?

IFAs provide a range of services to their clients, including investment advice, tax planning, and retirement planning. They may also provide other financial services, such as estate planning and insurance.

Regulated by the Financial Conduct Authority (FCA), independent financial advisors (IFA) are professional advisers who are legally allowed to provide financial advice to UK consumers. IFAs must hold a valid UK financial services license and must adhere to strict regulations set by the FCA.

All financial advisers are required to possess a QCF (Qualifications and Credit Framework) Level 4 qualification.

They either complete a degree or a diploma offered by professional bodies such as the Chartered Institute for Securities and Investment and the Chartered Insurance Institute.

There is a lot of confusion when it comes to the difference between financial planners and financial advisors. Both terms are often used interchangeably, but there is actually a difference between the two businesses 

Is there a difference between a financial planner and a financial advisor?

A financial planner is someone who helps you plan your financial future. They will help you set goals and figure out a plan to reach those goals. They may also provide advice on investments, retirement planning, and more.

A financial advisor, on the other hand, is someone who provides advice on investments. They will help you choose investments that are right for you and your financial goals. They may also provide advice on retirement planning, but their primary focus is on investments.

When it comes to financial advice, there are primarily two types – independent and restricted.

A restricted adviser recommends only certain product providers or products. This type of financial adviser typically works with one provider and considers their products or focuses on a specific niche such as pensions.

An IFA, on the other hand, offers unbiased advice on all products available in the market.

The services offered by IFAs

The goal of an independent financial advisor is to help you make the most of your money. Here are the services they offer.

Investment advice –This is perhaps the most well-known service that IFAs provide. This advice can take many different forms, but its goal is always to help the client grow their investment portfolio. This might involve choosing individual stocks and bonds, picking mutual funds, or even investing in alternative assets such as real estate or art.

Retirement planning – IFAs help you with retirement planning by helping you choose a pension product. They offer personalized advice based on how much you want to contribute, how long you want to contribute, and how much income you want in retirement. Apart from pension plans, they will also determine if ISAs and equity schemes are right for you.

Tax planning – IFAs work with you to come up with a tailored plan to minimise your tax liability whether it relates to your Capital Gains tax, Inheritance Tax, or income tax. There are a number of different tax planning strategies that your IFA can help you leverage such as tax-advantaged accounts apart from tax reliefs and allowances.

Mortgage planning – Given the vast array of mortgages available, it can be confusing to pick the right one for your needs. Whether it is discount mortgages, fixed rate, flexible, or tracker mortgages, you can rely on the expert financial advice your IFA offers.

Insurance advice – This type of advice is focused on helping the client choose the right type and amount of insurance coverage for their needs. This might involve choosing a life insurance policy, selecting a health insurance plan, or picking an auto insurance policy.

Should I use an IFA?

If you’re looking for personalised financial advice, an IFA is the right choice. They can provide unbiased and impartial advice that is tailored to your specific needs and goals. Here are the top reasons to use an IFA:

  • Get unbiased expert advice: You have been approached by an investment firm offering products that you don’t fully understand and want independent advice before making any decision. Unlike banks or other financial institutions, independent advisors are not beholden to any one company or product. This allows them to provide objective advice that is in your best interest.
  • Grow your money: Independent financial advisors (IFAs) play an important role in helping people invest their money wisely with their impartial advice on a wide range of investment products and strategies. They can help you understand the risks and potential rewards of different investments, apart from developing a personalized investment plan with an ongoing risk assessment
  • Make a major investment: You’re thinking about making a major investment, like putting down a deposit on a house or retirement planning. You may also have lots of different investments – both in the UK and abroad – that you want help managing.
  • Your current strategy is not working: You are not sure whether your current investment strategy is right for you. You may be wondering if there is something else out there that would be better suited to your goals.
  • Your financial situation is changing: Your circumstances have changed recently, such as having children or taking early retirement, and you want to make sure your finances are still on track.
  • You need expert tax and estate planning advice: You want expert help with estate planning including tax planning, probate, and estate administration. Your IFA can help to ensure that your estate is managed in the most tax-efficient way possible and that your beneficiaries receive the designated assets.
  • Find the mortgage or insurance that best suits your needs. You can rely on your IFA to understand various aspects of your mortgage including the down payment, the interest rate, the term of the loan, and the loan-to-value ratio. Your IFA also helps you understand the different features of life assurance and insurance policies, compare them, and find the best deal for your budget.

Finding the right IFA

There are a few things to keep in mind when you are looking for an IFA. First, make sure you find someone who is regulated by the Financial Conduct Authority. You can do this by visiting the Financial Services Register website. This is a public record of firms that helps you to find information about financial services firms and individuals who are authorised by the FCA.

Second, check the fee they charge. Some IFAs charge by the hour, while others charge a percentage of your assets. Finally, make sure you understand their investment philosophy and that it aligns with your own.

If you’re looking for help with investment planning, an IFA can be a great resource. Just make sure you do your research to find someone