- Personal Finance
The Advantages and Disadvantages of an Independant Financial Advisor
Independant Financial Advisors
An Independant financial advisor can be used for many different things in the world of finance. They can perform a whole number of tasks, both large and small, that can be provided to you completely free. An independant financial advisor can help you with a mortgage, house insurance, car insurance, setting up savings accounts etc, and whilst they are best know for giving you great advice and options, it should also be noted that most independant financial advisors will also complete all of the paperwork for you - for free! So howcomes an Independant Financial Advisor is able to offer you his or her services completely free of charge? The clear question is what is it in it for them!?..
When your Independant Financial Advisor sets up your mortgage, house insurance, car insurance, life insurance etc - he will receive a referral fee from either the bank or insurance company etc, for pointing you in their direction. Therefore when you take a second to digest this, you will release that you are getting someone to do all of the ground work for you which should lead to you getting the best deal, and the advisor is gaining commission which means that everybody is a winner! Fantastic or is it?
What you need to look out for when hiring an independant financial advisor (IFA) is that they will always be steering you towards a particular product or service. For example if the IFA is receiving a referral fee of 10% from one car insurance company, and only 2% from another; then it makes perfect sense that it is in their interest to sell you the insurance from the company offering the better commission.
So therefore what are the basic benefits of an IFA.
- They are completely free - never pay for one!
- They do all of the neccessary ground work for you.
- Complete tricky forms for you.
- Make the difficult phone calls for you and sit in long queues playing ABBA.
- Excellent for those who have restricted time.
Now lets take a look at the disadvantages of an IFA.
- They will aim to get you to buy the insurance that offers them the biggest commission rate.
- Not all companies offer referalls or commissions to IFA's and therefore they are out of the questions immediately.
- You will not always get the best deal on the market, but you might still get a pretty good one.
- Most IFA's can be a little patronising because they do not realise that you know what they are up to.
- The work they actually do for the money they get is usually quite little.
The best IFA's are those that have been recommended to you through friends or family. Sometimes they will even pay your friends for recommending them which is a nice gesture. As long as you keep the above points in mind you will be sure not to get yourself into too much trouble - just remember why are they are doing, and what you need them to do. If you can meet half way and are both happy with the outcomes then everyones a winner.
In order to find an Independant Financial Advisor you should have to look no further than the internet. It is their duty to come to your house or meet you somewhere that you would like to meet. There is no need to go out of your way because they need your business. There are such things as online financial advisors who will have a conversation with you online and then search everything for you at their desk. It does work but you never know what the person is like at the other end.
There is an increase of young students that are searching for jobs as a Financial Advisor or a trainee advisor and who can blame them. The work isn't too difficult and you are completely self employed. In order to be an official IFA you should be a memeber of the Independant Financial Advisors Association. Independant Mortgage Advisors are the most commonly searched for IFA on the internet.
There are both positives and negatives to obtaining indepant financial advice, but the most important things look remember is that you will not get a quote from all the providers of a service, and also you may be steered towards something more expensive because the IFA will take a bigger earning from it. As long as you bare this in mind you should be just fine.