Your adviser is meant to be independent and impartial when providing financial advice to you. If you are unhappy with the recommendations being made, then initially you should go back to your adviser with your concerns and obtain further evidence as to why this action is in your best interest.
If you are still not convinced then you need to seek out an alternative IFA, specialising in investments. The advice should be provided for a fixed fee. This will mean they aren't taking commission, and should therefore give you the confidence that they are acting impartially, and in your best interest.
It is vital when choosing an IFA that you have confidence in their ability to provide sound financial advice.
Why should I choose a fee-based IFA?
Until the end of 2012, when the retail distribution review will put an end to commission-based advice, advisers can still work on a commission basis. This means they make their money through initial commission payments at the outset, plus ‘trail' commission of 0.5% each year, all paid by the product provider from the client's investment.
The risk is they may favour those providers paying the most generous commission, and so not provide genuinely independent advice.
There's also a big question mark over the trail commission - many advisers give no follow-up service, yet still get paid each year.
Fee-based advisers take no commission (or reinvest it all into your funds). Instead, they charge an hourly fee of anything from £75 to £250, or in some cases a flat fee for specific work.
So what are the attractions?
- There's less incentive for IFAs to recommend particular products that they know pay well. So they're able to look across the whole of the market without bias.
- There's no pressure on them to sell products, as they'll be paid anyway. That means they can just give advice, if that's all that is needed.
- It's also a transparent system, in that clients know exactly what they're paying for.