Do I need an independent financial adviser?

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As retirees prepare to pursue the opportunities afforded to them by pension freedoms, many will be asking themselves whether they need independent financial advice.

A helping hand to disentangle your finances may be appealing, but financial advice does not come cheap; the average hourly rate for an independent financial adviser is £150 an hour according to research published by Savers need to ensure that the financial adviser is worth the cost. However, research also suggests that people who take financial advice are an average of £40,000 better off.

This guide sheds some light on when you might benefit from consulting an independent financial adviser (IFA).

What does an independent financial adviser do?

As the name implies, an IFA offers advice and guidance on your finances. An IFA can offer general advice, or specialist guidance on areas such as ISAs, inheritance, mortgages, insurance and pensions.

In practical terms, an IFA will start by assessing your situation, and consid your wider personal financial objectives, needs and interests, before offering suggestions on how to optimise your finances. They will then suggest which financial products may be the best way to achieve that end.

My bank offers free financial advice. Is that sufficient?

A bank’s financial advice service can be useful, but it is not independent and will often lead you towards the bank’s own products or those from companies with whom the bank has a commercial agreement. These may not always be the best for your needs.

How can I find an independent financial adviser?

Word-of mouth is by far the best route to finding a good financial adviser, though it is worth bearing in mind that your needs may be different to those of your friends and family. You can also use online services such as or VouchedFor. These sites allow users to search advisers by specialism, location and cost.

How can I tell if an IFA is authorised?

It is worth cross-referencing adviser qualifications with the regulator as there has been some evidence of advisers ‘inflating’ their expertise. The Financial Conduct Authority (FCA) maintains full, regularly updated and publicly accessible records of every authorised IFA, with details of the advice each adviser is authorised to give.

How much does an IFA cost?

As previously noted, independent financial advice costs an average of £150 per hour. However, depending on your advice scenario, an adviser may charge a flat rate, or their hourly fee may increase, or you may be able to pay them as a percentage of the investments you hold with them. Furthermore, depending on your means, an IFA could charge you more or less than the average, too.

It is vital to clarify how much you should expect to pay before taking advice. An IFA should be able to give you at least a rough estimation of expected fees, so make sure you ask before enlisting their services.

In April 2017, the Pensions Advice Allowance was implemented, allowing consumers planning their retirement to take up to £500 in three separate tax-years to put towards pensions advice so it’s worth checking to see if your provider allows you to do this.

Is an IFA worth the money?

This will depend on your level of confidence with financial decision-making, the amount you have to invest and the complexity of your affairs. An IFA offers value for money if you do not feel confident making financial decisions yourself, or believe that you require professional help to truly maximise the potential of your finances, perhaps because they are particularly complex.

If, say, you want to get involved in shares, funds and investment trusts, an IFA could help you make the right choices, and save you much time and money in the process. However, an IFA can also help with wider issues that affect you, such as pension planning, tax affairs and inheritance arrangements, structuring your finances in a way that works best for you.

If you are making decisions on retirement income, and drawdown versus annuities, the decision is complex and personal. At these important life stages, an IFA’s input can prevent mistakes and help secure peace of mind in retirement. estimate that retirees who had received assistance from an IFA received an average additional annual income of £3,654.

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