Whereas many of us may think that Independent Financial Advice has always been available, it is in fact a fairly modern innovation, as it was only introduced in 1986 with the passing of the Financial Services Act.

The Act introduced a strict distinction between the types of financial advice available to the public by authorising two different forms of adviser.

On the one hand the public can seek advice from the representative of a single insurance company (including the staff of most of the major banks) – these representatives are normally called salespeople or tied agents. The advice given is limited to the range of financial offerings available from their own company, and if they do not have a suitable product to meet your needs they should end the meeting. 

The alternative is known as independent financial advice, provided by Independent Financial Advisers (IFAs). The Financial Services Act allows the IFA to advise on all the products and services available and to match your needs to the most suitable solution (this is a legal requirement). An important fact which is sometimes overlooked is that the IFA acts for you, as your agent rather than for any product provider.

The modern financial world is more complex than ever, however the opportunity to develop a financial plan to improve your future prospects has rarely been better. Arguably it is only an impartial and knowledgeable adviser who can coordinate existing and potential financial arrangements who can ensure that the optimum benefits are achieved.   

One of the main challenges for most of us is that we may be unaware of the range of potential solutions to solve a need, for example a request may be made to take out a pension plan, when the need is retirement income. It may be questionable whether a pension provides the most effective form of retirement income for a substantial number of people, and following recent Government proposals unwise in certain circumstances.

Before making a recommendation, an IFA will examine your own or your company’s present financial circumstances in detail. For personal clients this would include their family and job status, tax position and that of dependents, household income, existing policies and investments as well as their plans and long term objectives and attitude towards risk.

Business clients benefit from a practical holistic financial resource, which is often not available from their traditional connections. 
 
IFAs will aim to establish which companies offer the best value as well as establishing that they are financially strong. They will examine investment returns, compare charges and monitor levels of service. This is the kind of reassurance that cannot be enjoyed when purchasing financial products via the telephone, a company salesman or from a newspaper.

Only once all these things have been considered will a recommendation be made.

But their role is not just to offer advice about new arrangements, but also to examine and monitor existing holdings without necessarily advising you to make changes. A periodic review of your circumstances can be vital to ensure that your aspirations will be met both now, and in the future.

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