/ Money

Do financial advisers always prescribe the right remedy?

Stethoscope on credit card

Doctors advise how best to look after our bodies, fitness experts whip us into shape and independent financial advisers ensure our finances are protected and in good health. But does an IFA prescribe the best remedy?

Alarm bells ring at Which? when we’re contacted by our members who fear they’ve been mis-sold financial products, not least when it’s the quality of financial advice that’s in question.

In a recent Which? Conversation poll, we asked if you thought an A-Level was a good enough qualification for a financial adviser. Over eight in ten (81%) of you thought people should have a higher qualification than A-level to become an adviser, the current minimum requirement.

Hello qualifications, goodbye commission

We have been campaigning for improvements for years, and it’s paid off – qualifications for Independent Financial Advisers (IFAs) are finally rising.

The regulator and the Association of Independent Financial Advisors (AIFA), the IFA’s trade association, accept the need to address the ways in which IFAs are trained, practise their profession and earn commission.

The financial regulator is increasing qualifications and removing commission, which is great news. It marks valuable progress toward our goal of improved standards of advice for consumers.

But a small, extremely vocal, minority of IFAs aren’t happy about it and oppose the measures. They are lobbying MPs, objecting to re-qualifying, saying the costs of training will lead to the closure of their businesses.

Sound advice?

We want to ensure the Financial Services Authority and Parliament hear from the people who use IFAs to paint a fair picture of the situation. After all it’s the customers who are supposed to be the beneficiaries of these changes.

So, have you ever sought advice from an IFA, and did you receive good advice? Was the commission structure explained to you? And, crucially, were the products they recommended right for your circumstances?

Comments
Guest
Dennis says:
6 May 2011

I suspect that my experience is typical. As a young man starting out in the world I was seduced by a very smooth talking guy who ensured that he became “my friend”. He sold me life assurance and a pension plan that resulted in him driving a Rolls Royce and I had to stick to my Ford for years. The pension plan proved to be a very expensive mistake.
Much more recently, I have again been misled by a qualified IFA, who has proved to be a qualified bullsh…….er! He talks a good talk, but with my much better understanding of these matters, I am very concerned about the fees I have to pay him. The FSA has a lot to reconsider!

Guest

I am seeing one next friday but only because I have some irregular circumstances that I need someone to help me make sense of before I buy another house.

I guess it depends on what advice you actually want, if you go in for a mortgage and come out with life assurance, pensions etc then you have been a victim of hard-selling.

In a similar way, I was nearly coerced into buying BT infinity last night until my girlfriend shouted from the other room “DON’T BUY IT!”. They definitely assumed I was buying/upgrading before I actually said “No, I don’t want it, stop asking for my details”, so I may complain about it.

Guest

Dennis, thanks for sharing your experiences with us, and I’m sorry to hear it was far from ideal.

Dean, Which? has produced a Guide on seeking financial advice which you can find here http://www.which.co.uk/money/tax/guides/choosing-a-financial-adviser/ . It might be useful to look through before your appointment?

Guest

excellent, thanks Hannah

Guest
pickle says:
6 May 2011

No – I think financial advisors are no better than you – provided you study carefully. My wife was taken in by a chap who sold her zero shares which totally collapsed leading to a total loss,

Guest

I agree with Pickles – there is no guarantee that any qualifications will guarantee a person will operate in the client’s best interest – especially if that person also gains a commission on the sale.

In exactly the same way that passing a driving test does not guarantees that the driver always acts within the highway code

Guest
Antrich says:
17 May 2011

One goes to a Financial Advisor to buy his knowledge and opinions/advice. Some are excellent and others very poor. You have to take in their advice and do your own research and decide whether or not to take the risk – unless you are a fool willing to throw away money, you have to take charge

Guest
michelle121carlo says:
9 June 2011

Hi I would like the law to be tightened up on these financial companies who cold call you , make all kinds of promises and convince you that what they are saying is true , when you are already financialy vulnerable, it is essential that we are given the correct advice , Due to my ignorance and the financial company convencing me that there actions were legal I have ended up bankrupt and in the prosses of losing my home . simply because i was given the wrong financial advice by a company who couldnt give a dam as long as they were getting there commission from the sale . Surely there should be some sort of law against this ?