This post is from the NerdWallet.com team of finance writers and experts in helping consumers find the best rewards credit cards.
The Finance World is Changing. Independent Financial Advisers Could Help.
The way people are handling their personal finances is changing greatly, so many are turning to IFAs, or independent financial advisors.
There have been recent adjustments to the tax code, bankruptcy laws, and debt management regulations, which means that big changes have to be made in the way people handle their household finances. Many believe this will lead a greater number of people to turn to financial pros for advice. It’s not always easy making financial choices, so the right IFA can make it simpler, and can even be more cost effective.
Changes in Financial Planning
With the economy taking a beating, changes have been made to state benefits and financial products, which will have an effect on those planning for retirement. Fixed income yields are unnaturally low and a lot of experts are also predicting lackluster equity returns for the foreseeable future. This means that people will have to re-calculate how they’re going to live after they retire. Two of the biggest factors that are driving people to find IFAs are investments and retirement planning. Experts believe that this trend is going to continue on for some time.
Financial advisors are around to help consumers plan and arrange their finances. They will help to customize an investment portfolio for you and help to manage it. They can also provide timely updates regarding accounts and the financial markets. In case you’re in need of more advice, you can seek help about managing credit card debt or help in choosing the correct low APR credit cards to minimize your interest expenses.
All Advisors are Not Created Equal
Independent financial advisors are not all created equal, and not all have the same services available. The best advisors that you can find will not be affiliated with just one company (hence the “independent” nomenclature). This type of advisor will most likely give you the best advice and will offer more options for financial solutions from various companies and their products. Then you’ll either pay for their advice by commissions or by a flat fee schedule.
You should ask your IFA whether he or she is tied or independent. If he or she is tied, then they will only be able to advise products from the company that they’re tied to. Independent IFAs have access to all types of products that are on the market. You should also inquire as to how long they’ve been an IFA, and to see their credentials. The minimum requirements for an IFA are the Certificate in Financial Planning and the Certificate of Financial Advice. The FSA (Financial Services Authority) regulates and authorizes all IFAs.
It’s important that you also find out how the IFA charges for their services and if they offer ongoing services. You may not want to go with one that charges hourly, especially if you’re looking to take a buy-and-hold or hands-off approach for your financial portfolio. This will give them the opportunity to tinker as much as they can, charging you more. In this case, a commission-based IFA could be more suitable, since there will be fewer transactions to pay for.
Beginning Your Financial Planning
When it comes time to begin financial planning, it’s important that you look at where you are today, and what resources and financial goals you have. An IFA is able to help you plan out your financial goals by gathering your financial info, determining life goals, looking at your financial status now and helping to strategize a way to achieve your goals.
These are also good tips for what you should be doing on your own anyway, but it can always help to get a second opinion. They can also give you better steps to take and the best products to use, that aren’t typically found in resources like Money magazine.
Since the new year has come and gone, it’s the perfect time to take control of your personal finances and investment options. You could save yourself a big headache in this downing economy by seeking advice and looking into an IFA.
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