What is an IFA?

An Independent Financial Advisor (or IFA) is a financial professional that is skilled at offering financial advice which covers the whole of the market. This means that they are not tied to a particular provider, and as such they should be able to offer you a wider range of options than an advisor who works for a small set of financial companies.

Do I pay for advice from an IFA?

There are a couple of different ways one can get advice from a financial advisor. IFAs can offer advice for free, but in this case they will only offer information and advice on products which they will get commission from. On the other hand, one can pay for the services of the independent financial advisor, and they will offer advice for all products. This is more common in higher level financial advice.

What qualifications will an IFA have?

There are different levels of qualification required to be an independent financial advisor. To offer advice, the firm must the registered with the Financial Services Authority. In turn, the FSA can ratify that the employees of the firm have the necessary qualifications. The entry level is a "Financial Planning Certificate" or "Certificate in Financial Planning".

An IFA can progress to a Diploma (or Advanced Diploma) in Financial Planning, and the highest level is a Certified Financial Planner. To achieve these levels, the financial advisor must pass a series of exams.

What is a Fiduciary?

Some independent financial advisors are also held to a special standard known as the Fiduciary Standard. A fiduciary works with an undivided loyalty to the client, and is transparent about their own gains from choices the client may make. In effect, they are bound to put the client's interests at best, even if it means they personally get less commission.

Can a broker work in their own interests?

Whereas a fiduciary is bound to only give clients the highest quality advice and will suggest financial decisions that will definitely be the best for the client, brokers are not so bound. Brokers must ensure that an investment you make is "suitable" to your circumstances, but this can also introduce conflicts of interest.

Many brokers may push a product, which while "suitable", is not the best solution for your financial needs. They may suggest a scheme which increases their own compensation or commission.

How many independent financial advisors are also fiduciaries?

It is estimated that only 10 of independent financial advisors currently operating are also fiduciaries.

What regulation is placed on IFAs in the UK?

In the UK, independent financial advisors are quite heavily regulated by the Financial Ombudsman Service. The UK has one of the most stringent regulation systems for IFAs, and as such the market is relatively safe.

What do I do if something goes wrong?

If you have grievance with how an IFA has handled your affairs, then you can raise a complaint with the Financial Ombudsman Service. This will be taken very seriously, and investigated. However, one cannot simply complain because the IFA's advice lost you money - it must be clear that the advice given to you was wildly wrong for your circumstances, and that the IFA was fully aware of the facts of your financial circumstances.