Getting financial advice

Managing money is not easy and for most of us there is a lot at stake if we do not make the right decisions. We may also be bombarded with information and advertising on financial matters, which can make it even more difficult to reach decisions. Because of this, it is quite common to ask for advice before making decisions about our finances – for example about how to best manage our money or which mortgage or pension to choose.

This section explains what financial advice is and where to find it.

You can read through this information sheet, or go directly to the sections you want to read by clicking on these links:

What is financial advice?

Financial advice is given to us by trained, professional advisers who are regulated by the Financial Conduct Authority (link opens in a new window). They combine their knowledge and experience with the information that we give them about our personal financial situation to recommend financial products or a plan of action that they believe is right for us.

It is important not to confuse financial advice with financial information.

We can pick up financial information from a range of places including banks and building societies, other companies providing financial services, newspapers and websites. The key differences between this information and financial advice is that it does not take into account our personal circumstances because it is designed for a general audience, and we have to decide if what the information is recommending is right for us. Even if someone asks you a few questions about your personal circumstances so they can give you targeted information, this still is not advice.

Where can I get financial advice?

You get financial advice from different places and a lot of the time where you choose to get it depends on what you are looking for. For example, if you want advice about mortgages you might go to a mortgage broker, while if you are interested in investing in the stock market, a stockbroker could be the right option. People also go to banks and building societies, insurance companies and financial advisers for financial advice.

How do I choose a financial adviser?

The points below may help you choose a financial adviser who is right for you:

Not all financial advisers cover all areas of finance, so it is important to make sure one you choose covers the subjects you are interested in
Some advisers give advice on a range of subjects, for example pension planning or tax, but do not recommend specific financial products, so check this out in advance
It is a good idea to find out what sort of experience and qualifications a financial adviser has
Find out what you pay for the advice and how your financial adviser is paid. It is important to note that they are often paid commission by a company for selling its financial products, for example mortgages or insurance
Make sure your adviser is regulated by the FSA.

Changes to financial advice regulations from 31 December 2012

On 31 December 2012, the Financial Services Authority's Retail Distribution Review came into effect. This puts in place several changes to the way financial advice must be given. The aim is to improve the quality of advice, reduce mis-selling and, in the longer term, improve the level of consumer confidence and trust in advisers.

The key changes are:

The cost of advice must be made clear to the customer
Advisers will be qualified to a higher professional standard
The type of service that advisers offer will be clearly explained.

Changes to financial regulatory organisations from 1 April 2013

On 1 April 2013, the Financial Services Authority - the organisation responsible for regulating financial services in the UK - was abolished.

It has been replaced by two new organisations:

The Prudential Regulation Authority (PRA): Part of the Bank of England responsible for ensuring the stability of financial services firms in the UK
The Financial Conduct Authority (FCA) (link opens in a new window): which regulates the financial services industry in the UK. It protects customers, ensures the industry remains stable and promotes healthy competition between financial services providers

The Bank of England is also responsible for the direct supervision of the whole of the UK banking system through the Financial Policy Committee (link opens in a new window) which can instruct the two regulators described above.,

Further information

The Financial Conduct Authority (FCA) has a register of all regulated firms and their agents (link opens in a new window) so it is easy to make sure that you are getting advice from someone qualified to give it
To find an independent financial adviser, go to: http://www.unbiased.co.uk/ (link opens in a new window).
First Stop Advice (link opens in a new window) provides free, independent information and advice about all aspects of care, housing and finance for older people.
The Money Advice Service website has information on getting financial advice (link opens in a new window).

Last updated: 3 May 2013

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