Options for Getting Financial Advice

With recent concerns about our economy and job losses, getting financial advice is a prudent move. You can get financial advice to help you plan ahead and make the most of your money from a variety of sources, including banks, insurance companies, financial advisers and planners, mortgage brokers and stockbrokers. 

If you do decide to see a financial adviser, they can give you advice about managing your money as a whole, or help you with specific needs or goals. You may decide you want financial advice if, for example, you:

• Want to start saving for a pension or to get a mortgage;
• Are considering protecting your family in the event of accident, illness or death;
• Inherit a lump sum of money;
• Are coming up to retirement and want to help converting your pension fund into retirement income

Types of Financial Advice

There are three types of investment advice.

Independent advice – where advisers make recommendations on products after researching the whole market and offer you the opportunity to pay by fee for their advice.

Multi-tied advice – where advisers are able to recommend the products of a limited selection of providers.

Tied advice – where advisers can only advise on the products of one provider.

Paying For Financial Advice

There are three main ways of paying for investment advice.

Fees – by paying the adviser a fee, either at an hourly rate or a set fee.

Commission – by paying indirectly through commission, which is deducted by the product provider from the product(s) you invest in. As well as the initial commission charged when the product is taken out, there may also be annual commissions, known as trail commission.

Fees and commission – by paying a combination of fees and commission. Make sure you understand and are comfortable with the payment arrangements before proceeding. If you’re getting investment advice, ask your adviser if the costs include a review of your investments from time to time or if you must pay for that service separately.

Preparing to Meet a Financial Advisor

The adviser will ask you questions about your financial circumstances and your future goals, assess your personal situation and recommend financial products that are suitable for you. Before meeting an adviser it is a good idea to:

get together the information you may need to give the adviser, such as details of any partners, children or other dependants, how much you earn, what income tax rate you pay and details of any financial products you already have;

think about your financial goals and how much you think you can afford to set aside to reach them; and

consider how you feel about risk – is it important that you don’t risk losing any money you put in, or are you willing and able to accept the risk of a possible loss if it gives you the chance of a bigger return?

What to Expect

The adviser will give you details of the service they offer and the range of products they can advise about. They’ll also give you details of how you can pay for this service. Use the information from different firms to help you shop around and compare what is being offered. Once they’ve discussed your goals with you they’ll give you a written recommendation of which products are suitable for you. They’ll also give you information about the product which should answer questions about:

• Your commitment
• How your payments are invested
• Main risks
• The tax position

The adviser will also tell you about the fees and charges and how they will affect your investment. Read this information to make sure that the product is right for you, and always ask questions if you don’t understand anything.