Become an IFA - Starting a Career as an Independent Financial Advisor

Information on becoming an IFA

IFA Promotion receives regular enquiries from the public asking for information about how to start a career as a financial adviser - particularly an Independent Financial Adviser.

This section explains how the required steps can be taken to reach competent status as an Independent Financial Adviser, how to progress through a chosen exam regime, and how to set up in business and thrive professionally as an Independent Financial Adviser.

The different types of financial advisers

The Financial Services Authority allows banks, life assurance companies and all other financial services providers to choose how they distribute their products. The choices are to distribute directly to the public, through tied financial advisers, multi-tied advisers, appointed representatives or independent financial advisers. The FSA has recently proposed changes to the current system under its Retail Distribution Review (RDR). We will therefore update these pages to reflect industry changes as and when they are introduced.

It is important that the public understand which type of financial adviser they are receiving advice from. It may be that an adviser of a high street bank has a limited number of products to recommend, say 20, and they are working on behalf of the bank. An Independent Financial Adviser on the other hand can choose from the whole market of over 30,000 products (source: IMA, DTI, AKG) and will work on behalf of his or her client.

What is an IFA?

An Independent Financial Adviser's role is to help people achieve their financial goals in the most efficient and suitable way whether they are an individual or business.

As we are all living longer and our net wealth is increasing it is important that we all have a financial plan that leads us to where we want to be in life and provides the money to pay for the lifestyles we want. The long term aim of holistic financial planning provided by IFAs is to ensure that clients own the property they wish to live in, free of debt and are able to maintain their desired level of lifestyle both in sickness and in health.

What does an IFA do?

IFAs will ask clients about their financial objectives and will 'fact find' until there is a true picture of the client's current financial situation. The client's attitude to investment risk needs to be established and priorities in the event of ill health or death will be discussed.

All this information will be written down as it forms the basis of any future recommendations made. Investment, protection and pensions are the core three areas where independent financial advice can be invaluable. Forward planning for a client's retirement can make the difference between living on a comfortable pension or not.

IFAs maximise both individual and corporate clients' financial potential and security by advising upon how financial matters should be arranged or by recommending financial products. IFAs have access to over 30,000 financial products (source: IMA, DTI, AKG) and will act on the client's behalf to recommend the most suitable based upon the information the client has provided.

The core of any successful independent financial advisory firm is building and sustaining strong client relationships. Connections with other professionals such as solicitors and accountants can be a fruitful source of new clients.

What skills are required to be a good IFA?

To be able to use marketing techniques and the press to attract clients
Being able to manage client relationships
To be able to listen to and empathise with clients in order to understand their financial issues and tolerance to investment risk
The ability to identify financial planning opportunities
IFAs must have 'sales' skills to encourage clients to invest spare money and take action to improve their financial situation
The technical ability to understand financial products such as investment, protection and pension products and their associated rules is important
Develop the required skills in order to provide a bespoke service to clients
Organisational skills
Compliance awareness
The ability to earn a reasonable living from offering independent financial advice.

Where can experience be gained to provide a good grounding in financial services?

There are different ways to start your training to become an IFA. Many people start off as an IFA by becoming employed by an existing IFA firm as a Para planner. This role is to support and "shadow" the existing IFAs. Expect to be a Para planner for 3 years or more before becoming an IFA. Do not underestimate this role as it where you learn about industry issues and products, where you study for exams and where you learn the soft skills required such as dealing with clients, from the successful IFAs around you.

Product provider companies and banks can prove to be a good learning ground for products and the rules. Many people working for product providers in technical roles move onto becoming an IFA after 'learning their trade'. It is however generally agreed that to be trained by an existing IFA practice is the most effective route to IFA success.

Examinations
Qualifications are becoming more and more important for financial advisers. To become an IFA the benchmark qualification is the Certificate in Financial Planning or equivalent (see www.thepfs.co.uk for further information). But to evidence ongoing professional commitment and to aid career advancement, higher-level exams should be gained. Our "Guide to IFA qualifications" lists 38 advanced qualifications offered by 8 examination and professional awarding bodies - the guide also details the study requirements for each qualification and contact information for each of the bodies.

What can an IFA expect to earn?

The independence and job satisfaction you can get by running your own business can be immeasurable and those with entrepreneurial flair should be able to quickly build an independent advisory firm of quality with commensurate financial return.

A guide to the expected income levels of financial advisers can be found in the job sections of financial trade magazines such as www.moneymarketing.com or www.ftadviser.com/jobs

The growing demand for financial advice

Everyone should look for the best way to save for their retirement, to financially protect themselves and their families and ensure they have the most suitable mortgage. As we are all living longer these decisions become even more important. Last year over half a million people and businesses contacted IFA Promotion to find an IFA. With the declining welfare state and changes to the financial provision driven by the government, the treasury and the regulator, such as pension simplification, the demand for independent advice will continue to grow.

What are the benefits of becoming an IFA?

Independent financial advice is considered the gold standard of financial advice by the industry since IFAs offer access to and guidance on a huge pool of financial products.

As an IFA you are free to give the advice you choose. You are able to grow your own business as you want to and earn as much money as you are capable of generating.

First steps

The City watchdog, the Financial Services Authority www.fsa.gov.uk regulates the provision of financial advice in the UK. You cannot simply set up a financial advice office when you want to, start trading and be authorised and regulated by the Financial Services Authority from day one.
There are rules and regulations contained within the Financial Services Authority Training and Competency sourcebook that set the standards of training and competence that all firms of financial advisers should reach.
The Financial Services Skills Council at www.fssc.org.uk provides opportunities for everyone in financial services, from the largest companies to sole traders, to realise their full potential through the promotion of lifelong learning and developing career pathways.
The Chartered Insurance Institute's resource for new recruits in the financial services industry is at http://www.pathways.cii.co.uk

A summary of what you can do to become an IFA:

Obtain the necessary qualifications such as the Certificate in Financial Planning.
Have the experience under your belt of having worked for an advisory firm beforehand and have the required compliance documentation showing that you are deemed competent.
Speak to other IFAs about their own experience. You will be surprised how much helpful advice you will receive. You can find IFA's in your local area using the 'Find an IFA' search.

In order to keep up to speed with industry events and to network with other IFAs - join trade bodies such as the Personal Finance Society, part of the Chartered Insurance Institute, at www.thepfs.co.uk, the Institute of Financial Planning www.financialplanning.org.uk or the IFS School of Finance www.ifslearning.com and of course IFA Promotion.

The IFAs below explain how they entered the profession and why.

Donna Bradshaw - IFG Group PLC

"I was a dental student at Edinburgh University but soon discovered dentistry was not for me. After a few roles at life and pension companies and a stint in a stock brokers I moved to an IFA firm. Being employed by an IFA firm has given me flexibility, career fulfilment and a decent living. I passionately believe that independent financial advice provides a more stable financial future for individuals, their families and businesses".

Pauline Corcoran, Director of Celandine Ltd

"I initially trained as a Solicitor but before entering a training contract I worked for a Trust Company, acting as executor in the administration of estates. This involved much dealing with investments and shareholdings. I then worked in Poland for a law firm in their expatriate tax planning and offshore company section. On returning to the UK, I decided I wanted to specialise in tax advice and decided a great route would be to retrain as an Independent Financial Adviser; I did this while working in the Financial Planning Department of a law firm. I now run my own company, the flexibility of which fits in great with having two young and active children."

Julie Hedge - Director of Christie Scott's

"I can offer solutions to problems and make a difference to the quality of people's lives, which is satisfying. From a personal point of view the ever changing marketplace offers me a constant challenge and the flexibility of the job fits in well with my role as a working mother."

Ian Green, Chairman of Green Legal and Financial Consultancy

"My previous career as a graphic designer was cut short by an injury sustained outside work. As my best clients were those in financial services a sideways move to that industry seemed like a good idea. I quickly qualified as an IFA and have never looked back. The diversity of clients and the financial problems to be solved mean that no day is like any other."

Daniel Clayden, Director of Clayden Associates

"I became an IFA following voluntary redundancy from one of the UK's leading financial services group, where I worked as a [tied] financial adviser. It was definitely time to make the change, when offered the choice, there was no choice, offering independent advice was the only way forward for me! Being an IFA has provided me with real fulfilment; I know I'm offering the best advice as I'm working solely of the behalf of the client. Likewise, the incremental qualifications process has given me the freedom to take my own direction and develop my own specialities"

A career as an IFA

Information on becoming an IFA