Essential Questions to Ask An IFA

This article is a summary of the podcast episode from Rebecca Robertson’s Money Mastery for Women Podcast available from itunes and directly.  Subscribe and listen to the latest in all things finance and wealth creation for women and hear from some incredibly inspirational female leaders too!

What to ask an IFA, from an IFA.

It is important to understand how regulation and financial advice work when thinking about what to ask an IFA.  Anyone that calls themselves a money coach, business coach or financial planner will not be working on a non-regulatory remit.    This means that any advice that they give is your liability if you take that advice – i.e. if it goes wrong then it’s your fault, not theirs.  In a regulated environment if you can demonstrate that the advice was wrong then you can seek compensation in certain circumstances.  So it’s important to know if you are working with someone in a regulated or non-regulatory environment.  Choosing which approach is best for you will depend in your personal circumstances – I operate in both the regulatory environment and I also provide wealth creation coaching services – which is more generic information sharing which you can action as you desire.

Regulatory advice is bespoke to you and will be based on detailed analysis and a report created for you.  It’s important to distinguish between the two and work out what’s right for you, and your position and what you are looking to achieve.

The first question is to ask yourself do you want to do it yourself or do you want to get advice?    Again the best way forward will depend on how much time you have , how much knowledge you have yourself and your desire to learn!

If you are working with a money coach or money mentor here are some questions you should be looking to ask:

  • Even if you are not regulated what qualifications do you have to be able to give advice?
  • What experience do you have?
  • What process do you follow and what is your charging structure? – will this achieve your objectives?

Understanding charging structure is important in a non-regulated environment – where in a regulated environment there is a lot of stipulation on how things have to happen and when they have to happen.  You will potentially also be working with multiple companies which needs to be understood. (expand: which multiple companies? I don’t understand)

Understanding whole of market and panels of companies that financial advisors work with is important.  It could be that your financial advisor is really restricted with only working with a limited number of companies.  You also want to check they are working only with companies that are solvent, and that have good diligence policies in place for vetting the companies that they work with.

Are you a self-employed IFA or an employed FA?

I myself am an independent financial advisor and am regulated by the Financial Conduct Authority.  I work through a company called Tenet and I have access to a very large whole of market proposition of many different financial institutions.  Someone who works for a bank for example or another institution can still call themselves an IFA but they are employed.  The biggest difference is in how much you can dictate the client journey – I’m the Director of my own firm so I can map out the client process within the regulatory remits. (This issue here is around client base, who ‘owns’ the client, so if they are employed or self employed but the business owns the client then who will work with that client long term – not the person, the business and whoever work for them, so understanding the business and the induvial advisers ‘ways’ and values is important)

Types of questions to ask around this area:

  • Are you independent?
  • Are you restricted in any way?
  • Are you employed or self-employed?
  • How do you work with clients?
  • Are you client led or are you dictated by the company you work for?

You want to get a real feel for the person and how they do business, and what the contingency plan is if they were to leave, or if they are to cease trading as an IFA.

How are you going to help me as an IFA?

Finding out how they work and how they will help you is really important to understand from the offset.  Will they be working in a transactional basis or more lifestyle financial planning?

It’s important to connect with your IFA but do your due diligence so that you don’t feel rushed or pressured at all to make decisions.  See if they offer a free or short paid initial consultation to assess if there is a “fit” between you both.

What is your charging / fee structure?

Fees should be very clear and described at the beginning.

Ways that IFA’s charge:

  • One off larger fee for upfront advice.
  • Small administration fee with % of amounts involved in investments and ongoing fee.

What’s key to understand is whether they provide ongoing service as part of their fee.

The RDR – retail distribution review is where an IFA needs to demonstrate the work they have done to warrant charging an ongoing fee.

Some advisors will charge depending on the complexity of the portfolio of work they are managing, and others will charge a flat fee.  I charge a flat percentage fee across the board, but there are some with varying percentages – it is important to know as this could mean you are overpaying unnecessarily. 

Fees are really crucial to understand so this is an essential question to ask and clearly understand.

So before you think about selecting or even talking to an IFA, it is important to understand the stage you are at in your journey with financial abundance as you may need some basic coaching or to join a membership that will help you with getting to grips with some financial foundations.  Check out my non-regulated website for more information on support and mentoring opportunities with me, and for more information on the regulated advice I’m able to offer, check out www.evolutionfinancialplanning.co.uk

I hope that this has been a useful insight into the questions to ask an IFA.  Don’t forget to subscribe to my podcast for more sessions like this!

Love

Rebecca

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