What we want is a kindly figure who will listen intently to our financial history and then harness extensive knowledge, experience and a measure of second sight to draw up a plan guaranteeing us a happy and secure life. Not too much to ask is it? Well, such individuals do exist.
They are called personal accountants, and those who, measure up to the description above don't come cheap. They are not to be confused with financial advisers, who will be happy to select a suitable product for you in a particular field, such as investment or insurance.
Don't expect a personal accountant to change your life; they may save you some legwork, and perhaps that the rap if things go wrong. After all, pensions and endowment policy miss selling really did happen. But that begs the question: is there really such a thing as objective advice out there? How much does it cost, and can anyone do much more than lick a finger and stick it up to the wind? First, let's pin down who's who.
FINANCIAL ADVISERS
'Financial advisers' is a term that embraces several species- Independent Financial Advisers (IFA), tied agents, appointed representatives and brokers. While it might seem blunt, one of your first questions to anyone offering information or advice should be:
" What are you?" advisers must tell you clearly what their interest is."
INDEPENDENT FINANCIAL ADVISERS
IFAs, as their name suggests, should be in a position to look at any companies or products on the market and find those that suit you best. IFAs who advise on investments, such as shares and collective funds, pensions, or equity-based life insurance, must be authorised by the Financial Services Authority (FSA) and abide by its regulations.
IFAs who advise only on loans, mortgages, non- investment-based insurance or bank and building society accounts do not have to be FSA-authorised and are covered by separate code of practice, depending on their area of expertise. Many of these advisers are due to be regulated by the FSA from 2004.
TIED AGENTS
Don't expect tied agents to check out the whole spectrum of products on your behalf. They usually advise on those of a single company (except in case of stakeholder pensions, where they can 'adopt' the offerings of other providers), so should at least know their products thoroughly. They may be employed by the provider, or simply act as agent and collect commission on sales. Banks and Building societies, estate agents and travel agents often act as tied agents. As with IFAs, tied agents are expected to make the effort to understand your requirements and to politely turn away if none of their products is suitable. Yes, honestly!
APPOINTED REPRESENTATIVES
Here's where the water starts to get muddier because appointed representatives are self-employed individuals who may act either as tied agents for a particular company, or for a firm of IFAs. If it's the latter, they can easily give the impression of being IFAS in their own right, but it is illegal for them not to be straight with you about their status.
BROKERS
Brokers again may have ties with certain companies or be independent. They normally specialise-often in investments, insurance or mortgages- and will, therefore, claim to have the greater knowledge than IFAs, who may cover a wide range of financial products.
Some product providers will deal only through brokers, because it saves them a high-street presence and they can, in theory, pass their savings in overheads on to you. Many brokers also form relationships with providers, which allows them to obtain products at preferential rates. If not regulated by the FSA they are covered by bodies such as the Mortgage Code Compliance Board.
DISCOUNT BROKERS
Further confusing the issue when it comes to investments are discount brokers. They operate on an execution-only' basis, which means they are not allowed to offer more than general information on products, as opposed to individual advise tailored to your own circumstances. Their selling point is that they rebate all or part of their initial commission when you buy a product such as a ISAs, making their money later on renewal commissions from the provider. Discount brokers may also act as IFAs and offer personal advice, but you can't then claim discounts.
So you need help to find a particular product-who you should you consult? For collective-fund investments or pensions, choose an authorised IFA or an appointed representative for a firm of IFAs. For mortgages, you may be best approaching specialist brokers, but check whether they are independent or tied to particular companies.
Liza Mathers writes for Seek4finance. Our visitors can apply online for a range of personal finance, solutions including personal loans, mortgages, credit cards, savings, current accounts and investment information. Visit http://www.seek4finance.co.uk today.
Article Source: http://EzineArticles.com/?expert=Liza_Mathers
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