Financial Advice: Trust, transparency, and shopping around

Wednesday, 3rd December 2008 12:48 - by Resident IFA

I’ll try not to be smug, however, I think this story bears repeating. One year ago a Client came to my door in his search for an Independent Financial Adviser (IFA). He had seen an advert in his Sunday paper for IFA Promotion, the largest promoter of independent financial advice in the UK. Calling them landed him with three telephone numbers of IFAs local to him (My company being less than 2 miles away). The financial advice requirement he had was in conjunction with his looming 65th birthday and the desire to ensure he made the best decisions in relation to the pension funds and other monies he had accumulated. Pension decisions are extremely vital as they more-often-than-not entail making one-off, irrevocable choices and decisions. Our meeting this week, the third in a year, confirmed to him that I am his best bet...poor phrasing, I know! The logic employed was that he had seen the other two IFAs IFA Promotion had suggested, feeling the greatest trust he had was in me. Operationally, he also felt most comfortable with me. He admitted that he had asked some questions that he knew the answers to full-well already. This was his way of weeding out any salesmanship or embellishment of the facts. My clear and coherent answers, backed up by factual information, had won out. A secondary issue, although I did not know I was in competition with other IFAs at that time, was my handling of commission – a hot potato with a lot of Clients. I recommended a course of action that I believed was in his best interest, but that paid approximately 37% of that from another, perfectly legitimate, course of action open to him. If anything, this seemed to be the clincher as he felt I was anything but commission-driven. Apart from me being such a great and honest guy (!), this situation clearly illustrates and re-iterates for me the basic principles to be applied when looking for independent financial planning advice from scratch. Some top tips: o Think local (providing the expertise/specialism you need is available locally) o Three’s not a crowd - seek more than one IFA opinion/meeting o Clear and understandable - Do you understand them? Do you understand how they are remunerated? Do they explain things in a clear and concise fashion? Do they understand your needs? Do they seem genuinely caring and knowledgeable in equal part? o Referrals - If a friend or colleague has a had a good (or bad) experience of an IFA, ask them to let you know what happened and who the IFA was. I think nothing beats a personal recommendation based on experience, as it gives a head-start and the greater potential of a positive outcome. o Gut instinct and trust - Nothing beats your intuition. If it looks too good to be true, it probably is. If you feel unsure, don’t sign or commit to anything! Happy (IFA) hunting! Until next time...