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Advisers

'Advice' must be unbiased and independent. Otherwise it's not advice - it's selling


Financial management is difficult and you will almost certainly benefit from advice.

Until you become a net saver, and therefore an investor, you should be able to obtain all the advice you need from free sources. After that you may need to pay for professional help. The trick here is to avoid lifetime ad valorem fees on your savings. Once you've saved your first £10,000, to spend maybe £1,000 on advice seems like a lot but the advice you receive will be just as applicable to your first million as your first £10,000.

You are going to live 40 years from your first £10,000 aren't you? Do the compound interest sums on just 1/2% per annum on your future savings pattern. If you are saving for the long term it's what you have at the end that matters, not what you have at the beginning. So spend £1,000 at the start instead of 1/2% for 40 years.

An adviser should charge you a fee, not a commission. More, he should charge fees for all his clients and not take commissions from anybody. Otherwise he is not unbiased.

Many advisers are 'tied' to specific wealth managers. This means they only recommend the funds of that manager (or funds from which that manager takes a commission). One major wealth manager (but not the largest) has 1,700 tied advisers. We have looked at a few websites of tied advisers but are unable to find any disclosure of that conflict of interest. Presumably the regulations either do not allow it or are framed in a way that makes them ineffective.

There is no single qualification or designation that guarantees you are getting real advice. The advice industry before the regulatory changes of 2014 was taking £6 billion per year off the consumer in return for acting as the sales channel of a financial products industry. Things are different now, but it's still a big industry and it only has one source of profit and that is you.

Advisers don't need to be clever - just honest. (Simple Investing only needs simple advice). Try a local accountant (making sure that is all he is) or a solicitor. And for anything more serious be ruthless in understanding your adviser's source of income.

The government-sponsored advice service MoneyHelper has a page that lists no less than five different adviser directories but offers no advice on how to chose between them. Regrettably we can't decipher their marketing schtick either.

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