A.

There are two different types of financial adviser. The range of products they may be able to offer you depends on whether they're 'independent' or 'restricted'.

• Independent financial advisers ('IFAs') give unbiased advice about the full range of financial products on the market.
• Restricted advisers only give advice on products from a limited, pre-selected range of providers - and sometimes just one.

One of our Contributors, Matthew Spence - Director at Spence Financial Ltd. - has a handy video outlining the key differences between the two. Click here to watch it.

Boring Money

A.

I have some sympathy with your question and advice fees across the sector have not always been fairly correlated with value. My main beef is that they are not transparent or clear enough, making people confused and unable to compare. More advisers are moving to a fixed fee basis, which I think is interesting as it fully separates the value of the advice given, from the products. I think it’s important to be clear on the difference between financial planning and advice, and investment performance. The main job of an adviser is not to pick an investment portfolio but to help clients plan for their goals, save in the right structures, minimise tax, and with a clear understanding of cash flow and afford the life they want. Without stress.

The problem with your proposal is that the best and most gifted financial planner in the world is not responsible if stock markets crash. It could be through careful planning and avoiding unnecessary tax, your £100,000 ‘only’ falls to £95,000 after fees and tax in one year, instead of £90,000, to use a crude example. So it’s also about managing risk and capital preservation, as well as just trying to make as much as possible.

If you are in the market for advice, but have the concerns you outline here, you could look for an adviser who charges fixed fees for advice. But markets do fall and that’s an inevitable part of the cycle so I don’t think you’ll ever see a model where people don’t get paid if this happens – as no-one could survive. It’s when people play silly buggers and start to try and guarantee performance that things go wrong and fees go up which shoots the whole sector in the foot (think about the old ‘with profits’ disaster, for example).

Holly Mackay

Founder & CEO, Boring Money

A.

Recommendations are great. If your friends don’t have an adviser, then look at their reviews on Google. Read what they say on Twitter/X. Some advisers are clearly out there doing great work, they speak at industry events and they contribute to their communities. Others can be a bit snarky, and you may instinctively think ‘Not for me’. Or have a nosey at their LinkedIn. I think you can quite quickly get a feel for what they're like as a person. It’s a personal relationship so this is important. At the end of the day, I think it comes down to who you trust to look after your affairs. And who you have been able to have an honest dialogue with about fees. And who you think is worth the cost, for the peace of mind and financial support they will offer.

Holly Mackay

Founder & CEO, Boring Money