Independent Advice Or Not?

An important point to consider before making your choice is whether you are happy to consider the products of just one company, or whether you want independent advice about the full range of products available. Under the Financial Services Act, all investment advisers must give advice on one of those two bases. For example, a few banks and the odd building society offer independent advice through their branch network. Most other banks and building societies have decided to tie themselves to a single insurance company for the purpose of selling life insurance and pensions through their branches, though they may also run a totally separate subsidiary offering independent advice. Many general and insurance advisers are tied to a single insurance company, others are independent. All solicitors and accountants giving invest-ment advice are independent.

An adviser must make quite clear at the time you start to do business with him whether he is representing one company and, if so, which one, or whether he can give independent advice. If you're unsure of his status, ask him to clarify it. You can also check his status by consulting the SIB register (see above).

A group of insurance companies which seek new business through independent advisers set up the Campaign for Independent Financial Advice (CAMIFA) at the start of 1987 to promote awareness and use of independent advisers. A separate company, IFA (Promotions) Ltd, has now taken its place; you can phone them on 01-200 3000 for a list of ten independent advisers in your neighbourhood. Independent advisers are

allowed to display a distinctive blue and white 'Independent Financial Adviser' logo at their premises and on stationery. Don't confuse this logo with information about the Self Regulating Organisation to which the adviser belongs.

Getting Investment Advice Case History

Miss G filled in a form to enter a prize draw competition. She wasn't surprised that she didn't win but she was surprised to receive a series of phone calls from a company who tried to persuade her to invest in the futures market. Futures contracts are a way of gambling on the price of certain commodities. They are highly risky and are suitable only for investors who can afford to lose money. Only the most irresponsible investment adviser would suggest that a private investor of limited means like Miss G should consider them. Yet she was plagued by phone calls telling her that she could double her... see: Getting Investment Advice Case History

More money