Types of financial advisors
You can get financial advice from:
- Tied agents who advise and sell products from a financial services firm they are tied to. They still have to give you a product that is suitable for your needs, but they cannot shop around on your behalf.
- Multi-agency intermediaries, such as investment or mortgage brokers, advise on and sell products from a number of financial services firms.
- Authorised advisors are obliged to consider relevant products from all financial services in the market.
Some firms offer advice only whereas some offer advice and can sell products as well as advise you.
The first time you deal with a financial advisor they must give you their ‘Terms of Business', which sets out their authorised status and a description of the services they offer. It will also explain whether they are tied to one financial services firm for any products they advise on.
Mixed status
The number of firms an advisor deals with may vary from one type of product to another. For example, a financial advisor might offer pensions and investments from six financial services firms, but may be tied to one insurance company when selling home insurance.
Check your advisor is authorised
Not everyone who calls themselves a financial advisor is authorised to give you financial advice. Some may even be working illegally. You can check whether an advisor is authorised by checking the Financial Regulator’s registers website.
Always make sure that the advisor you use is authorised to give financial advice before handing over your money. If they aren't regulated and things go wrong, you may not have access to complaints procedures and compensation schemes. For example, the Financial Services Ombudsman cannot investigate complaints against an unauthorised firm or advsor.
All financial advisors that are authorised have to meet the requirements of the Financial Regulator’s Consumer Protection Code (pdf).