The new approach to financial advice
15 October 2012
by Karen Heaney for Standard Life
The recovery is stalling and there’s no end in sight to the eurozone crisis. In the current climate, it’s crucial that your investments work as hard as they can. But not everyone is comfortable taking financial decisions when the outlook’s uncertain - we look at how an adviser can help and how advice is changing
The professional perspective
A financial adviser can help you look beyond the short-term distractions, and ensure that you stay focused on your investing goals, whether that’s getting on the property ladder, saving for university fees or building up a pension pot.
What’s more, says Karen Barrett, CEO of unbiased.co.uk, the independent financial advice website, they can also identify issues and opportunities that you might not have considered. And when markets are bumpy, an adviser can review your investments and make sure that you’re still comfortable with the level of risk that you’re taking.
Financial advice has been transforming
Advisers have been preparing for this regulatory change over the past few years, which comes into force on 1 January 2013.
There are three main benefits:
Many financial advisers already agree a charge in advance for advising their clients and keep it separate from the product’s own charges. The changes mean every adviser will have to do this. They also need to tell you whether their fee is fixed, or, for example, by the hour, or a percentage of the amount you’re investing.
Even more transparency
Your adviser must also tell you whether their advice is entirely independent - looking across the whole of the market - or restricted, specialising in particular areas or offering a set range of products.
Higher level of qualifications
Financial advisers will have to hold a higher level of qualification and commit to at least 35 hours a year of professional development. They also have to sign up to a Financial Services Authority (FSA) code of practice and hold a Statement of Professional Standing (SPS) to show that they are meeting industry standards. Fortunately, many financial advisers have already invested in higher qualifications and are well prepared for the new regulations.
The new rules have been welcomed in the industry. Karen Barrett embraces the changes, saying they’ll lead to a better understanding of financial advice. “People will become better informed about what’s available, and that will be very empowering.” Fay Goddard, chief executive at The Personal Finance Society, agrees: “Professional financial advice can take away your worries and give you the reassurance that you’re doing the right thing.
About this article
Please note that the opinions and comments expressed by contributors in the article are personal and not necessarily those of Standard Life group (Standard Life Plc and its subsidiaries).
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