Independent Financial Advisor v Bank

The biggest clue when considering whom to entrust with your pension and savings is in the first word of your question – Independent.

I have yet to hear of a bank who takes a truly independent view of a person’s finances.

Unless they have Independent Financial Advisors within their team who have full authority to advise across the full range of pension and savings products in the whole of the UK investment market, then their advice is by its nature restricted.

Most often they offer a limited selection of investment options defined by the banking group they are part of. The days of bank advisors being targeted and paid on the sales of particular products, regardless of if they were really the most suitable solution, are hopefully over. Though one wonders if some implied pressure remains to recommend particular pension and savings products for commercial reasons.

Here’s the Financial Conduct Authority’s definition of restricted and independent financial advisors:

“If you are looking to get advice about investing your money, there are two different types of financial advisers – independent and restricted.

The type of adviser you choose can affect the advice you are given.

• Independent advisers offer a wide range of financial products and providers.

• Restricted advisers will generally focus on a limited selection of products and/or providers.

All financial advisers must be approved or authorised by us. Both independent and restricted advisers must pass the same qualifications and meet the same requirements to ensure they are providing suitable advice.

An adviser or firm must tell you in writing whether they offer independent or restricted advice. If you are not sure what they offer you should ask for more information.”

[Source: FCA website: fca.org.uk

In the end it’s up to your assessment of how well a bank is able to advise you compared to an IFA. With so many bank closures across the country now it’s going to be increasingly difficult to get a one-to-one meeting with anyone. And will that person still be there with all the ongoing corporate shake-ups? If it’s a private bank you are looking into you’ll likely have to travel to large city location so you’ll need to know that location is suitable for you.

If, like most, you favour having the option to meet your advisor face-to-face then an independent IFA firm in a convenient location is going to be high on your list of priorities. You don’t need me to tell you that the advisor needs to get to know you as a person to provide financial recommendations which are appropriate to your situation and aspirations.

A Little Action Plan

Draw up a shortlist of your potential advisors.

Treat the process like you would a job interview.

Except you are doing the selection process – you get to ask the questions.

Here are 5 to be going on with:

1. Is your advice independent or restricted?
2. Talk me through your investment and advice process.
3. How do you measure my risk profile?
4. Show me your cashflow planning process
5. Explain your fees and service proposition to me.

I think by the time you’ve cross-referenced the answers to each of these you’ll have whittled down your selection to one or two advisors whom seem the most professionally competent and operate within a supportive firm.

All of this is a very rational and sensible process when you are dealing with money matters.  Though bear in mind research shows time and again we make decisions far more on an emotional basis than we might at first think.

In this regard, instinct can serve you well in sussing out which out of your shortlist are really interested in you . . . not just your money.

Interested in finding out more?

Seeking a second opinion on your financial future costs you nothing.

Simply call our friendly team on 0121 355 4455 or drop us an email to appointments@oaklandswealth.com to arrange a confidential chat.

Oaklands Wealth Management, founded by Helen Blackburn in 2004 advises

clients around the Midlands on retirement planning, pensions & investments.

Her firm holds British Standard BS 8577 for client service & investment process.

Minimum investment is £500,000 (£650,000 for pension transfers).