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What is an Independent Financial Adviser?

Jun 14, 2008
At the risk of sounding facetious, an independent financial adviser is someone who gives independent advice on financial matters. In fact, stating the rather obvious in this way put an important stress on the three vital components of the independent financial adviser's role.

Independent

The independence of the adviser is critical. When an independent financial adviser is consulted, it is important to know that he or she has no vested interest and will not be influenced in any way by selling a single company's products. Independence means that the client can expect the adviser to act completely impartially, entirely in the client's best interests, and not because there is an established dependent relationship between the adviser and one particular supplier. The importance of this independence cannot be stressed enough. The adviser needs to be licensed by and is regulated by the Financial Services Authority, and independence is something that is central to such recognition. The client's faith and trust in the adviser stems largely from the latter's independence.

Financial

An independent financial adviser needs to have expert professional knowledge of a huge range of financial products and services. Since it has one of the most highly developed financial services industries in the world, the sheer range of products available on the British market means that knowledge and professionalism must be of the highest order.

Because of the sheer range of subjects with which an independent financial adviser needs to be familiar, there is a correspondingly wide range of qualifications available to individual advisers. For example, the adviser might have professional qualifications awarded by the Chartered Financial Analysts (CFA) Institute, the Chartered Insurance Institute (CII), the Institute of Financial Planning (IFP), the Personal Finance Society (PFS), the Pensions Management Institute (PMI, the Securities and Investment Institute (SII), or others. Above all, however, the adviser knows that his is a constantly changing market, with new products and services emerging all the time. He or she will make it his or her business to stay completely abreast of these trends.

Adviser

As an adviser, the third and vital component of the independent financial adviser's role harks back to the first of his or her qualities, independence. The financial advice given must be "best advice" when recommending any product or service. That is to say, the advice must be the advice that is genuinely in the client's best interest. It is as though the adviser had stepped into the client's shoes and was giving advice entirely from the client's perspective. In this way, the client can be assured that the advice is truly independent, objective and impartial advice that will satisfy the interests that the client himself or herself has identified.

Summary

It is surprising just how much meaning can be packed into the three words that describe the role of the independent financial adviser. But as the above brief, thumb-nail sketchy has shown, each of the three words encapsulates a fundamental and vital part of this professional's job. Each word describes the obligations that the adviser has towards each of his clients, so that the clients, for their part, can rest absolutely assured that they receive genuinely independent, well-informed and expert financial advice that will serve their own best interests.
About the Author
Steve Wright is Managing Director of Wrightway Financial Consultants, Independent Financial Advisers specialising in Pensions, Investments, Mortgages and Insurance. One of their major areas is being a Independent Financial Adviser .
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