What to expect from an FSA authorised financial advisor or an IFA

FSA Authorised Financial Advisors and IFAs

When seeking financial advice, it is essential to ensure that the financial advisor is authorised by the Financial Services Authority (FSA) to give advice.

That means your adviser will have passed exams covering a wide range of financial topics and have been through the FSA authorisation process, both factors which should give you confidence.

The starting point for advice is usually the completion of a comprehensive planning questionnaire, which may be a paper document or a computer driven set of questions. The extent of the questioning can be something of a surprise – it may even seem intrusive. But to give personal financial advice, some personal information is necessary. It is really important that your adviser understands what you want to do with your life and your finances, and the process can sometimes take quite some time.

You do not have to answer all of the questions, but if you keep quiet, the advice you receive could be compromised – if your adviser is prepared to act without full disclosure of your relevant personal information (which some are not). In any event you may find that you are unable answer some of the questions immediately, either because you do not have the data to hand or because you have not thought about the topic before. It is important to understand that the information you give will be treated confidentially and its recording will be subject to strict data protection rules.

Once all the questions and any necessary follow-ups are completed, the planning can begin: do not expect a model solution on your first meeting! Most advisers will produce a report as the next stage of the process. Typically this report will:

- Summarise the financial and other details gleaned from the questionnaire;
- Highlight issues which your adviser believes should be addressed;
- Makes proposals to deal with these issues.

You should read the report and any attached documents thoroughly. Make sure that you understand the contents and agree with the summary of the questionnaire information. It may seem like repetition, but wrongly interpreted facts can lead to incorrect advice. If you have any doubts or queries, ask your adviser for a further explanation. Think of the report as a discussion document rather than the end product.

Once any issues with the report have been settled, your adviser will then normally produce a final report. This will be accompanied by any documentation you need to complete, such as application forms (although some of these may be completed online).

You should again be prepared for a raft of questions. Providers of financial products will often have to ask some probing questions, particularly where life and health insurance is concerned. Anti-money laundering rules can also add to the seeming interrogation.

Getting everything is in place may take some time. The next visit to your adviser will normally be for a review of your planning. This will typically be on an annual basis or early in the year, linked to end-of-tax year planning. Your financial planning should be reviewed regularly to take account of changes in your personal circumstances, the progress of any investments made and any revisions to tax or other relevant legislation.

The first part of the review will check what changes there have been in your personal circumstances since the previous meeting. The plans and investments put in place will then be examined and any recommended changes will be agreed, probably via correspondence unless there are major issues. The review cycle then begins again.

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