Make financial advice work for you

Published by Sam Barrett on 21 November 2008.
Last updated on 24 August 2011

Apple and pencils

When it comes to seeking advice, there are four types of adviser you can see. They vary according to the products they can recommend and the way they are paid for advising you.

1. Independent

Independent financial advisers act in the best interests of their clients and will search the whole market to find the most appropriate product. To be classed as independent they must offer a choice of payment options. Clients can either pay a fee for advice or receive advice for free, in which case the IFA will earn a commission from providers for any products sold.

2. Whole of market

A whole-of-market adviser can offer the same breadth of advice as an independent financial adviser, but cannot be called independent as they only work on commission and don’t allow consumers to pay a fee for their advice.

3. Multi-tied

A multi-tied adviser has relationships with a number of providers, typically between four and six, and is only able to offer their products. They can be paid by fees but it is a not a
condition of their status.

4. Tied

A tied agent can only recommend the products of one company. This is the type of adviser you would speak to if you called a product provider or, in many cases, a bank or building society. These advisers will earn commission for any products they sell.


To confuse matters, some advisers can fit into more than one of these categories. “An adviser might be independent when they provide advice on mortgages, but tied to one insurer for any home insurance they recommend,” explains David Elms, chief executive of IFA Promotion. “They will tell you their status, so make sure you feel clear about the type of advice you will receive.”

How to find an IFA

It's worth asking your friends or family for a recommendation, but if they can't help or you want to find an IFA in your area, then you can search for an IFA for free with Moneywise and IFA Promotions.

Simply click here and enter your postcode - our tool will search for firms near your home or work.

Alternatively contact the Institute of Financial Planning (0117 945 2470) - it offers contact details for IFAs that have the Certified Financial Planner certificate. Both allow you to search for IFAs based on their areas of speciality.

Paying for advice

If you do decide to see an adviser it’s also important to consider how you will pay for the advice.

Commission, which is built into the premium or the charges on the product, is the most common form of remuneration.

In many cases, you won’t pay any more than if you bought direct from the provider, but you do get the benefit of being able to make a complaint if you later feel you have been mis-sold.

As well as upfront commission, some products, such as investments, include renewal commission. This is paid on an annual basis, providing you still have the product.

Fees, which are paid by around 10% of IFA clients, are usually charged on an hourly basis (between £75 and £250), or will depend on the work carried out on your behalf. For instance, an adviser may charge a set fee for arranging a mortgage.

While this might seem like an additional cost, advisers who charge fees won’t take commission from the provider, so you might end up with more of your money invested or lower charges.

Many consumers are happy to let their IFA earn a commission if it means they don’t have to pay for advice. However, others would rather pay a fee if it guarantees that the advice they receive is wholly independent and the IFA has not been swayed by commission payments.

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