Personal finances can be complicated, which is why it’s important to ask advice from a qualified professional.  Getting the right advice can help you make the most of your money.

One of the Financial Services Authority’s aims is to help individuals receive fair and relevant advice on managing money at every stage of our lives.  After all, we can’t be experts at everything, and without getting sound advice it’s easy to buy a product that’s not necessarily the very best one for your needs.  For most people then, the first meeting with an IFA is the beginning of a useful, long-term, professional relationship.

Your IFA is duty-bound to make sure not only that the advice you receive is suitable at the time, but that you have an opportunity to review that advice and suitability of any products at regular intervals in the future.  With their expertise, level of commitment and attentive service in mind, it may be easier to understand why advisers charge a fee.  The fees and the structure for payment will vary, but charges should always be fair.  Ask your IFA which charging structure they use:

• Fees.  Typically between £75 to £250 per hour depending on the level of expertise involved, and whereabouts you are in the UK.  Reassuringly, the first meeting is often at the expense of the adviser but you’ll pay for the advice you’re then given at an hourly rate or with a pre-agreed sum.
• Commission.  Providers pay the IFA from charges associated with the products you choose. This could include an initial sum, and a ‘trail fee’: a smaller amount, paid regularly, which the IFA will receive as long as you hold the product.
• Fees and commission.  Some IFAs will offer a combined charge, which means that you could receive some of that commission back (normally into your product) or offset it against your fee.

You can compare services and charges before making a decision – firms have to have a ‘menu’ detailing their charges and services.  Your IFA will talk these through with you in advance, and give you a overview of their charges and the way you’ll receive advice.  

Something for you to be aware of - the Financial Services Authority, which regulates financial services firms and advisers in the UK, will be introducing changes to improve the way you receive and pay for advice from 31 December 2012.  Read more about the future of financial advice.