As the organisation promoting Independent Financial Advice in the UK, unbiased.co.uk regularly attracts visitors looking for information about a career as a financial adviser, particularly as an independent financial adviser (IFA). 

Types of financial advisers

Currently, there are three main types of adviser. Tied advisers, who can only offer products and services from the providers they work for; multi-tied advisers, who advise on a restricted range of products; and IFAs. Only an IFA can give you unbiased advice across all financial products and mortgages. The FSA has recently proposed changes to the current system under its Retail Distribution Review (RDR) and from the end of 2012, advisers will offer either independent, restricted or simplified advice.

Another change coming into force at this time is qualification standards. The current rules mean that financial advisers need to hold a qualification at QCF Level 3, which is broadly equivalent to a GCSE level qualification. With the world of financial advice becoming increasingly complex, the new requirements will mean advisers need to be qualified to QCF Level 4, which is Diploma standard.

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 can choose from the whole of 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 a business.  The long term aim of holistic financial planning provided by IFAs is to ensure that clients own the property they wish to live in, are free of debt and are able to maintain their desired level of lifestyle both in sickness and in health.

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.

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 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 clients’ 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?

• Technical ability to understand financial products such as investment, protection and pension products and their associated rules
• Communication skills – to convey complex financial matters/products to clients in more simple terms
• Listening skills – to be able to list to and empathise with clients in order to understand their financial issues and tolerance to investment risk
• Being able to manage client relationship[s
• The ability to identify planning opportunities
• ‘Sales’ skills to encourage clients to invest spare money and take action to improve their financial situation
• To be able to use marketing techniques and the press to attract clients
• Organisational skills
• Compliance awareness

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 by becoming employed in an existing IFA firm as a paraplanner.  This role is to support and ‘shadow’ the existing IFAs.  Expect to be a paraplanner for 3 years or more before becoming an IFA.  Do not underestimate this role as it is 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 provide to be a good learning ground for products and the rules.  Many people working for product providers in technical roles move on to 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.  Currently to become an IFA the benchmark qualification is the Certificate in Financial Planning or equivalent (see www.cii.co.uk  for further information).  However with the introduction of the Retail Distribution Review the benchmark qualification from the end of 2012 has been raised to QCF Level 4 examinations. To read more about the exams visit www.cii.co.uk/pages/financialservices/qualifications/RDR-implementation.aspx .  To evidence ongoing professional commitment and to aid career advancement, higher-level exams should be gained.

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 build an independent advisory firm of quality with a financial return to match.

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.

First steps

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 you must 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 all firms of financial advisers should reach.

The Chartered Insurance Institute’s resource for new recruits in the financial services industry is available at www.pathways.cii.co.uk.  

Summary of what you can do to become an IFA

Obtain the necessary qualifications and try to gain experience in working in the industry or for an advisory firm. Speak to other IFAs about their own experience.  You will be surprised how much helpful advice you will receive.  You can find IFAs 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 Institute of Financial Planning www.financialplanning.org.uk or the IFS School of Finance www.ifslearning.com  and of course unbiased.co.uk. LinkedIn hosts a growing number of groups where advisers discuss relevant topics and these can also be great places for finding job opportunities.

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 400,000 people and businesses contacted unbiased.co.uk 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.