With this in mind, FE Trustnet asked Rowan Dartington’s Tim Cockerill and Investment Quorum’s Lee Robertson to draw up a simple checklist for private investors who want to get ahead of the game.
They believe the five main points people need to follow when looking for an IFA are:
- Work out what advice you want
- Make sure the IFA is part of a well-resourced firm
- Look for someone with respected professional qualifications such as the IMC, CFA, etc
- Make sure they follow a code of ethics
- Try to form a good relationship with the IFA you have chosen
"I think it depends on what the client is looking for with regard to the sort of advice they want to receive.""On one side, if you are looking for a holistic overview with advice about areas like inheritance tax, planning for the kids' education or setting up a trust for your children, then you need a qualified and quality IFA; basically a general practitioner."
"You would be looking for someone who has a top-down view and says you need to do A, B, C and D."
"This sort of IFA should be able to see the client’s situation and give advice accordingly; they need to appreciate, for example, if you haven’t got a will."
However, Cockerill says investors looking only for advice on where to put their money will need to take a different approach.
"In this case, then I think the more qualified the better and clients should be looking for an IFA with experience. The experience is harder to find out about but it certainly matters."
"The IFA should be asking you to fill out a risk questionnaire so that they can determine what sort of investments you should be going for and, if they don’t, clients should be asking what is going on."
Cockerill adds that investors should consider the size of an advisory firm before making their decision, as the larger ones will likely be better resourced to deal with the rapidly changing investment environment.
"I think it matters because when the advisers are working within a team, they are able to discuss different ideas and have more exposure to new information."
"This means that, potentially, they are more up-to date as in this changing environment it is difficult to keep on top of things," Cockerill said.
"Another point when it comes to finding your IFA is that clients should get on well with them. I know this is a small thing, but you should be looking to set up a long-term working relationship, so it does count."
Lee Robertson (pictured), chief executive of Investment Quorum, stresses the importance of understanding an adviser’s charging structure so that clients know how much they are going to be paying.
"I think private investors should be looking for IFAs that have open and transparent charging schemes. The IFAs should also show a commitment to their education, through holding different qualifications." As with many transactions, Robertson says a recommendation is valuable in the decision-making process.
"Investors should look for IFAs who have had endorsements from other sources," he continued.
"The public should also look into which code of ethics their financial adviser follows."
Robertson adds that after 1 January, advisers will look to specialise in particular types of clients, and private investors need to keep in mind whether they fit the adviser’s area of expertise in terms of investment level and types of products used.