Adviser categories and qualifications

What you need to look for when approaching financial advisers or planners.
Seeking out a professional Financial Planner to help you to plan your future is one of the most important steps you will ever take. You will have an ongoing relationship with that individual for many years, and it is vital that you feel that you can trust them and that they fully understand you and your situation. Many clients often say that their Financial Planner ultimately becomes one of the most important people in their lives and so taking the time to ensure that you select the most suitable person at outset is crucial.

How to check if your adviser is authorised.
Most individuals giving financial advice in the UK need to be authorised by the Financial Services Authority (FSA), specifically those giving advice on investments, savings, pensions life insurance and mortgages. Your first task is to check whether the adviser or planner that you are considering using is indeed authorised, and registered with the FSA. This can be done by checking with the FSA on their website www.FSA.gov.uk

Independent or Tied?
You should check on the type of adviser that is available. They will fall into three different categories: -

• Independent Financial Adviser (IFA) - Can advise you on products from the whole of the market
• Multi- Tied Adviser - an adviser who can only advise you on products from a limited range offered by the organisations to which they are 'tied', although they still have to recommend the one/s most suitable for you from that range
• Tied Adviser - An adviser who can only recommend the products of one company to which they are 'tied'. Again, they must select and recommend those that are most appropriate for you from that range.

Qualifications - An overview.
Thereafter you will look at the qualifications of advisers. It is likely that advisers could have a range of qualifications which can often be confusing for consumers, as examinations are provided by a number of examining bodies.

The basic level qualification advisers initially need to have attained is:

• Certificate in Financial Planning (or its predecessor the Financial Planning Certificate/ FPC)  

     OR

• Certificate for Financial Advisers (CeFA) to gain authorisation to give advice to clients.

These are the absolute minimum qualifications required and advisers qualified to this level will use the designation CertPFS or CeFA after their name.

Many advisers and planners will have more advanced qualifications, such as:

• Diploma in Financial Planning (DipPFS),
• Associateship of the PFS (APFS) or 
• Chartered Financial Planner status

which indicate that they have passed a series of examinations set by the Chartered Insurance Institute on such topics as taxation, investments, pensions etc.

The CERTIFIED FINANCIAL PLANNER designation on is an advanced qualification, being an internationally recognised certification awarded to individuals who have already proven their technical competency by passing appropriate examinations to the level of DipPFS or equivalent, but who then are tested specifically on their Financial Planning skills to become CFP professionals. In the UK, the Institute of Financial Planning is responsible for the assessing and the certification of CFP professionals.

Other organisations such as the Securities and Investments Institute (SII) and Chartered Institute of Bankers in Scotland, offer appropriate qualifications for financial advisers however these tend to be less commonly held.

Check if your adviser is a member of a professional body
Many financial advisers and planners are members of a professional body. This ensures that they adhere to a code of practice and ethics, so asking potential advisers whether they belong to such a body should also be important.

Working out which type of adviser you need
As a general guide, before you contact any adviser or planner it is advisable that you first have a very clear idea of the nature of advice that you need, as that way you can clearly communicate your needs to any adviser or planner that you initially contact. If for example, you need someone to help you to create a full financial plan which includes attaining all your financial and lifestyle objectives over the long term, then you should seek out a CERTIFIED FINANCIAL PLANNER professional who has specific skills in this area. If your needs are restricted to a particular aspect of your finances for example, arranging life insurance cover or tax planning, then you should seek out an adviser with the specialist skills that are required.

Adviser Remuneration - The Alternatives
You should also think about the way that you wish to pay for the advice or service that you receive from an adviser or planner. Most advisers will not charge you for the introductory meeting, which is used to establish whether there is sufficient mutual ground for the adviser and client to work together. Advisers can receive a commission payment from product providers for introducing your business to them where the purchase of a financial product is involved. This 'commission' basis is a commonly used form of remuneration for advice in the UK today. The alternative is that your adviser might work on a fee basis, either charging you for their time or on a different basis such as a percentage of the assets upon which you are asking them to advise you. This may or may not involve you having to write out a cheque as the adviser or planner may be able to offset commissions due to them against the fee that they have agreed with you, rather than reinvesting any commission payments into the product for your benefit, and simply charging you a fee for the advice. It is therefore very important that you clarify from outset how each adviser or planner will charge you for their services.

What to do if you have a complaint about advice given
Finally, should you feel that you have been advised incorrectly, you should go back to the adviser and raise the issue with them. In the unlikely event that you do not reach a satisfactory conclusion, The Financial Ombudsman Service is ultimately available as an independent body created to solve disputes between advisers and their clients, in the unusual instances where they cannot reach a satisfactory conclusion directly themselves. It has the power to instruct where compensation is due, but should only be used as a last resort where all other means of redress have failed.

Back to top

Contact us | Jargon buster | FAQs | Sitemap