What is an Independent Financial Adviser (IFA)?
An IFA is a professional adviser who will consider every aspect of your personal and financial situation and will give you advice that is tailored to you. If an IFA recommends a product (for example a pension or investment) he can offer you the best choice from the whole of the market.
Unlike a free guidance service or information you may find online, the advice provided by an IFA will take account of your personal circumstances and will make clear recommendations.
An IFA is different from those advisers employed by banks, building societies and insurance companies. These may give you financial advice, but they will only recommend their own products. An IFA has no affiliation to any product providers and does not earn commission from recommended pension and investment products. An IFA should use products based solely on merit and is only responsible is to the customer.
Professional Wealthcare is an IFA
It is becoming more difficult these days to find independent advice. Our experience is that we have become increasingly busy due to a very established client base and the numerous enquiries we receive. We do try to accommodate new enquiries where possible, but sometimes we have to be careful how much new work we take on. It is our important objective to give existing clients a first class service and remain available for their ongoing and ad hoc requirements.
I am aware that many advisers are deciding that the pressure of maintaining independent status is too onerous and are instead converting to a restricted status. This means that their advice is restricted in some way, usually to a short list of products. There is increasing pressure from the regulator, The Financial Conduct Authority (FCA), for us to demonstrate our independence and at times this status is challenged. This challenge often comes in the form of an observation that a limited number of providers has been used for most client recommendations. I see this challenge as a poorly thought out criticism for the following reasons:
When we research the marketplace for a product, we look for important features and benefits that are important to most clients. We also want to use good quality and well managed investment funds. These all need to sit within a product that facilitates these important aspects at a reasonable and competitive cost. It should come as no great surprise to anyone (particularly anyone within the advice industry) that the same product providers will emerge as most suitable time and time again.
It would be a travesty to use a wider range of products and providers in order to satisfy regulatory indicators, when this is not conducive to best advice and good client outcomes.
However over the longer term, due to changes in product design, legislation, taxation etc, a shift in product selection will naturally occur. So, a provider who was most competitive 3 years ago, is perhaps unlikely to be the most competitive today. I have observed this within my own business records. Consequently, the product providers I use today look very different to those I used a few years ago.
True independence is demonstrated by using products from the top of the pile.
The important of maintaining independence
Having explained the fact that most of my business is naturally placed with a few providers, the time is never far away where a client may have different needs. For this reason, it is important to me that am not restricted in any way and I maintain the ability to use an alternative product or provider.
An example of this would be when a client has a large capital sum to invest. It is very important in this instance to consider spreading the investment across different investment strategies, which would often mean using 2 or 3 different product providers.
Another example is where a new product comes to the market. In this instance I would be able to respond very quickly and use this product where appropriate.
Another example is where a client may already have a perfectly good investment product. It would be a shame (and potentially detrimental to the client) if all I could do was to transfer them into a plan that happens to be on my panel. It is clearly preferable if I am able to take on the servicing of that plan regardless of who it with.
In spite of the increasing pressure to restrict advice, my intention is to maintain my independent status as long as this option is availalble.