7 Steps to Finding an Adviser in a Post-RDR World

7 Steps to Finding an Adviser in a Post-RDR World

Date : 22 Sep 2017
posted By : eff_admin

At the end of 2012 The FCA (or FSA as they were then called) threw a cat amongst the pigeons of the financial advisory world. This metaphorical moggy came in the form of The Retail Distribution Review (RDR); a piece of legislation that banned commission on the sale of investment products and insisted that advisers must be better qualified to give investment advice.  For some less scrupulous financial advisory firms this was the end. They could see the Horsemen of the Apocalypse approaching and there was no other way out than to pack up shop and ship out. RDR signalled the beginning of a new era in financial advice; a future where you, the client, receive the very best, unbiased service from the most highly qualified advisers. Great news, as long as you do not already have an ‘old style Financial Adviser’…..

A great deal of you who sought advice prior to December 2012, will have been well informed and would have received honest, trustworthy and dependable planning. However, there are some of you that may have experienced substandard, biased and commission driven financial ‘advice’. RDR has helped to eradicate poor quality financial planning, by forcing some less scrupulous advisers out of the industry. Arguably, some honest advisers have also been forced out, simply because they do not have the resources to meet the new, high standards. In both cases, a great deal of clients have been left without a financial adviser in this post RDR world. So what do you do if this is you?

You are probably thinking that this bright and wondrous new world that I described at the outset is beginning to look grim, but do not worry. Finding a new adviser in the post-RDR world is not as daunting as it may seem. Efficient Portfolio have compiled a 7 step guide to finding an adviser you can trust, will get you the best results and will be able to give you the highest levels of service.

Good financial advice can mean the difference between a comfortable future to one that is full of uncertainty and worry. So it is vital to find an adviser who you feel confident in and trust. This applies whether you have an existing adviser or not. So where do you begin?

The Importance of Being Independent

Firstly, I think that it is important to distinguish between a Financial Adviser and an Independent Financial Adviser (IFA). I am sure that the difference is obvious to most of you, but what does ‘independent’ actually mean? What makes an IFA independent is the fact that they are advising you on the whole market, as opposed to selling products from one or a select number of companies.  This means that when it comes to the product selection stage, they will find the best product for you, not the product that their company endorses (for example a bank can only recommend one of their own or a limited number of products!) So this is my first piece of advice; when choosing financial guidance, choose an Independent.

It’s All in the Money

Now we get down to the ‘nitty gritty’- the matter of money. You need to find out how your IFA wants to get paid. Within the financial sector there are, unfortunately, some Financial Planners still implement confusing fee structures which hide their costs, even in a post RDR world! Firstly, you need decide if you are happy with the structure and whether or not it is relative to the returns you could receive. You also need to make sure that you are receiving ‘value for money’. Paying for advice on an hourly rate simple encourages a slower, more drawn-out process. We would recommend opting for a planner who will give you a clear fee each stage of the process. This way you know exactly what to expect and it is likely that your planning will be completed in a much more timely fashion.  You should also look to see if your Financial Planner has any ‘Money Back Guarantees’ in place. Not only will this ensure that your planning is done with your specific needs at its core, it will

also give you peace of mind that if you are not happy, you will get your money back.

At Efficient Portfolio, we have worked hard to ensure that our payment structure is transparent and

explained at the outset. All trustworthy IFAs will do this, so make sure to always ask. We also have a 100% money back guarantee in place, so that if you are not happy with the financial plan we build for you, we will refund all of the fees you paid.

Education, Education, Education

The ‘shining light ‘of RDR has forced advisers to obtain higher levels of qualification, however there is good and there is the best! Obtaining qualifications shows commitment to standards, an aptitude for learning and a desire to be knowledgeable for one’s client. It also means that the adviser has studied finance and has built up expert knowledge in a range of areas. Win, win for you. There are of course different levels of qualification; the highest being the coveted Chartered Financial Planner accolade. Currently only 10% of independent financial advisers have been awarded this title, and approximately 7% of firms have received Chartered status. This gold standard in the industry is only awarded to advisers who have proven extensive knowledge, compliance and a strong ethical practice.  Efficient Portfolio were the first firm to achieve this accolade in Rutland. Our approach has always been client centric, but we can offer them even better service.

On this same topic, you need to ask what your adviser specialises in. Most good IFAs will specialise in certain areas. For example, Efficient Portfolio are experts in a range of fields, but we have specific advisers who deal with each area; Charlie Reading has gained specialist qualifications in investments, pensions, taxation and trusts, Eric Duckworth is an expert in mortgages and Justin Bentley deals specifically with corporate financial issues. So if for example you need advice on a frozen final salary pension scheme you have from a previous employer, you need to seek the advice of a pension specialist like Charlie Reading. We invite our potential clients to ask us questions about our experience and qualifications- we are always happy to oblige.  You must make sure that the IFA you chose can help you in your desired area.

Proper Financial Planning

You may be wondering what exactly ‘proper’ financial planning is. Well put simply, this is planning that is centred on your specific needs, lifestyle and requirements for the future. RDR has signified a new beginning for the industry; financial planning is evolving and developing into something that is no longer about generic products, common goals or generalised strategies. Financial planning is becoming a profession that discovers your unique aspirations and shows you the ways in which these can be achieved. This style of financial planning is also called ‘Financial Life Planning’. Of course, this is something new to the world of finance and is not as yet common practice, but it is the only real way of truly achieving your dreams through financial means.

At Efficient Portfolio we are embracing Financial Life Planning. We believe that the client’s core dreams and desires need to be at the forefront of their financial planning. Every client is unique to us and we work hard to ensure your financial planning is designed specifically to meet your dreams and aspirations. We aim to help you overcome obstacles that could prevent your dreams from coming to light.

Lifetime cash flow forecasting

Understanding how your actions now impact upon your future is a power insight. But how can you actually do this? What you need is a mechanism that will set out multiple scenarios about what could happen to your money during your lifetime and where that would leave you. I am delighted to tell you that this tool does exist.

If you would like to know where you are heading financially, and let us be honest- who would not, Lifetime Cash Flow Forecasting is the tool for you. So what is it and how does it work? Lifetime Cash Flow Forecasting is a tool that allows you to understand the impact that the decisions you make today will have on your future finances. Essentially, it provides you with a very visual display of how your future finances will look, both from a Cash Flow point of view (will I have enough money to pay my out goings in the future) and from an asset point of view (will I run out of money, or at what age). Not only is every aspect of your finance today taken into account, hypothetical situations are also factored in from your likely future, along with assumed interest, inflation and growth rates. This means it becomes your unique Lifetime Cash Flow Forecast that best reflects your future.

When you are looking for a financial planner, always ask them if they have the necessary technology and experience to produce Lifetime Cash Flow Forecasts. This is a fairly new tool, but if your firm, like Efficient Portfolio, is up to speed with their knowledge and services, they should be able to help you with this.

Clear Investment Process

Ideally, you want to be dealing with a firm that has an ongoing investment process. This system is a step by step guide that is utilised for all clients who wish to invest their money.

You may think that simply picking random funds for each client would be the best way to operate and would fulfil each client’s unique goals. Unfortunately this is not true. This method is unreliable, lacks continuity and will prevent you from receiving a continuous level of service. This method also does not lend itself well to ongoing reviews of your funds.

At Efficient Portfolio, we take each investment client through the exact same process.  We evaluate your needs, design your investment strategy and continuously reviewit for you. Our structure also gives you access to a Discretionary Fund Manager (DFM) to manage your money https://www.efficientportfolio.co.uk/advice-discretion-management-tool-best. A DFM has the power to quickly move your funds if they are under performing, but you still have full control. Read the article above to see the benefits of using a DFM.

You’re the Boss

The very best way to decide if the IFA you have in mind is suitable is to interview them. You can do this either over the telephone or face to face. At Efficient Portfolio we welcome our clients to do both- whichever method is most convenient for them. We conduct ‘Exploration Meetings’, where we can see what you need, how we can help and give you the chance to make sure that we are right for you.

You will also get a good idea of whether or not you get on with the IFA. Of course, you are not interviewing for a new best friend, but having a solid rapport with the IFA is important.

So Where Now?

So now that you are armed with the tools of what to look for in an IFA that you can trust, where can you find them? The internet is a good place, put I would not conduct a generic search (anyone can put up a website claiming to be an IFA)! Instead, I would use websites such as www.unbiased.co.uk and www.findanadviser.org. Both of these websites specialise in Independent Financial Advisers and list location, qualification and specialist fields. ‘Find an Adviser’ only lists advisers who are members of ‘The Personal Finance Society’, and thus who have signed up to the code of ethics.

If you would like to have a chat with us directly, please pick up the phone and call us on 01572 898060, we’d love to hear from you.

Disclaimer This document is intended for informational purposes only and no action should be taken or refrained from being taken as a consequence of it without consulting a suitably qualified and regulated person. It does not constitute financial advice under the terms of the Financial Services and Markets Act 2000. It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this document. Past performance is not an indication of future performance. Interested parties are advised to contact the entity with which they deal, or the entity that provided this document to them, if they desire further information. The information in this document has been obtained or derived from sources believed by Efficient Portfolio Ltd to be reliable, but it does not represent that this information is accurate or complete. Any opinions or estimates contained in this document represent the judgement of Efficient Portfolio Ltd at this time, and are subject to change without notice. © 2016 Efficient Portfolio Ltd.

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