Join our community of smart investors

How can I find a good financial adviser?

Damian Fantato has some tips for anyone looking for a professional adviser to manage their money
November 14, 2019

It’s a question that many people frequently ask and it’s one that FT Adviser, the FT’s specialist publication for the advisory profession, addresses, with the help of Matrix Solutions, in its annual rankings of the Top 100 Advisers.

Firms are ranked according to which attract the most business, the number of advisers they employ and the length of time they have been helping savers with their investments, plus an estimated performance based on asset growth.

In addition to the FT Adviser rankings, here are my own tips for those seeking financial advice. 

As far as the Financial Conduct Authority (FCA) is concerned, financial advice has to be provided by a qualified professional and comes with a recommendation tailored to your circumstances. This means it will come with the protections bestowed by the Financial Ombudsman Service and the Financial Services Compensation Scheme.

The failed Woodford Equity Income fund was featured on Hargreaves Lansdown’s “Wealth 50” best-buy list until the day of its suspension, but those investors who bought in because of this had not been “advised” to buy it, as far as the regulatory definition is concerned. This has not deterred law firm Leigh Day from seeking potential legal redress; it says it has been contacted by over 500 investors.

The situation is further confused by the fact that Hargreaves Lansdown employs around 90 financial advisers who, for a fee, can provide regulated advice to customers.

 

Advisers can afford to be picky 

The financial advice profession has come a long way in recent years. The Retail Distribution Review, introduced in 2013, banned commission and required advisers to have more stringent qualifications. As a result, the number of financial advisers has fallen from more than 40,000 to 26,000.

The lack of supply, combined with the fact that you have to pay for it yourself, has created an “advice gap” of people who can no longer access an adviser.

This has been compounded by 2015’s pension freedom reforms. Those with large pension pots face an array of options. They need to make an informed decision, and receiving regulated advice is commonly a requirement. 

As a consequence, many advisers don’t have to do very much to get new business. Some are perfectly happy to continue with their existing clients or simply rely on referrals arising from them.

If you’re looking for an adviser, a referral from a friend or family member is one route. Another is to use an online directory such as Unbiased. But it is worth remembering that it doesn’t cover the whole market — advisers have to pay to appear on Unbiased.

Many advisers will be the most interested in helping people manage their finances and investments on an ongoing basis, rather than assisting with a one-off transaction. But persevere and you will find one who can help you. 

 

Not all advice is created equal 

You must understand what sort of advice firm you are dealing with, because this could impact where your money is invested and how much you pay.

The key question is — are they independent or restricted? Independent advisers offer the full range of financial products and providers across the whole market. Restricted ones do not.

Restricted advice does not necessarily have to be a bad thing: for example some advisers may decide there are some obscure products their clients are unlikely to ever need, so they restrict themselves.

Other restricted advisers only offer products from certain providers. This can be because they are — and apologies for this bit of jargon — vertically integrated.

This usually means they are part of a bigger company which owns an advice business alongside an investment platform and a fund management company. Quilter and Aberdeen Standard Life’s 1825 are both examples of this.

The supposed advantage of vertical integration is that the advice you receive will be cheaper (because these companies can leverage their scale) and safer (because you will only ever be recommended a centrally-approved product).

Yet critics of vertical integration say that because the advisory and platform part of such businesses often struggle to make money, the funds have to “pick up the slack”. As Mark Polson of the Lang Cat consultancy told me recently, this could mean clients end up paying higher charges. 

 

How much should you expect to pay? 

A percentage charge levied on your investments — sometimes called ad valorem — is overwhelmingly the most common charging structure. More than 4,000 firms use this structure according to the FCA, while around 1,100 charge by the hour.

Analysis by the Lang Cat that shows most advisers tend to charge between 1 per cent and 0.75 per cent.

St James’s Place charges 0.5 per cent for advice on an ongoing basis — on top of its 4.5 per cent charge on a customer’s initial investment. SJP attracts a lot of criticism, but being expensive has not stopped its growth. Just as you could save a fortune by buying your groceries in Aldi, some people prefer to shop in Waitrose.

The main problem that advisers need to address is the clarity and transparency of their fee structure.

I’ll leave you with some good news. If you are seeking financial advice today, you will probably be dealing with a better qualified, more professional person than you would before 2013. Many advisers now aspire to become chartered to demonstrate their professionalism. And for consumers, things are likely to get better.

Recent reforms mean advisers now have to tell you exactly how much — in pounds and pence — they will charge you and what for.

Hopefully these tips will help you find the right person to get the financial help you need.

 

 

 

RankRank in 2018CompanyCF30sAssets under management in retail investment funds 2019 (£m)
16Quilter plc25 or more37,000
237Close Brothers Group25 or more570
326Grant Thornton UK LLP25 or more1,100
45Wilfred T Fry (Personal Financial Planning) Ltd14 to 24810
53Mazars Financial Planning Group14 to 241100
6N/ACharles Stanley Group25 or more1100
7N/AProgeny Wealth Ltd25 or more800
820St James's Place Wealth Management plc25 or more110,000
91Tenet Group25 or more5,800
1041LEBC Group Ltd25 or more1,600
1170Openwork Group25 or more9,800
12N/ABartlett Wealth Management Ltd07 to 13230
13N/AHazlewoods Financial Planning LLP0 to 6260
1410The Tavistock Investments Group25 or more1,400
1557Cullen Wealth Ltd14 to 24800
1655Punter Southall Group25 or more3,100
17N/AEquilibrium Group07 to 131,100
18N/AMarsh Commercial25 or more2,600
1954Ludlow Wealth Management Group07 to 131,100
2018Westminster Wealth Management LLP25 or more410
2127HFMC Wealth25 or more270
2225Paradigm Norton Financial Planning Ltd14 to 24550
239Foster Denovo Group25 or more1,700
2473Smith & Pinching Financial Services Ltd14 to 24410
25N/APremier Benefit Solutions Ltd14 to 24490
26N/ALycetts Financial Services Ltd07 to 13220
2768Skipton Group0 to 63,600
2815PI Financial Ltd25 or more590
29N/ABarnett Waddingham Group25 or more280
3032Perspective Group25 or more1,300
31N/AAntrams Financial Services07 to 13280
3234Validpath Ltd25 or more510
33N/ABrooks Macdonald Group25 or more560
342JLT Group25 or more1,600
3545AWD Chase de Vere25 or more5,300
36N/AClark Gillone07 to 13460
3761Wren Sterling Group25 or more1,100
3828HSBC Bank Group25 or more9,000
394Kerr Henderson Group14 to 24750
4012Beckett Investment Management Group14 to 24560
4144InPartnership25 or more3,000
4249Argyle Consulting Ltd07 to 13470
43N/AEllis Bates Group25 or more160
4463Sense Network Ltd25 or more2,600
4521Harwood Wealth Management Group25 or more2,100
4680N W Brown & Co Ltd14 to 24520
478Brewin Dolphin Ltd25 or more11,000
4865Advanta Wealth Ltd14 to 24340
4948Central Investment Services (Scotland) Ltd07 to 13580
5038Smith & Williamson Group25 or more3900
51N/AA & J Wealth Management Ltd07 to 13300
5243Lloyds Banking Group25 or more18,000
5331Joseph R Lamb Independent Financial Advisers Ltd07 to 13280
54N/ABroadstone Group14 to 24380
5567Sanlam Financial Services Group25 or more2,400
5651Tilney Group25 or more7,400
5790Skerritt Consultants Ltd14 to 24350
58N/AMattioli Woods Group25 or more970
5996Wills & Trusts IFP Ltd07 to 1392
6082Clairville York Ltd0 to 6220
6164Barclays Group25 or more4,600
6242Lumin Wealth Management Ltd07 to 13400
6369HFS Group14 to 24390
6435Hoyl Group25 or more460
65N/AThe Private Office Ltd25 or more1100
66N/ASchofield Money Ltd0 to 6180
6740UBS Group25 or more1,400
68N/AKeyte Ltd0 to 6120
6911Wingate Group07 to 13340
70N/AMurdoch Asset Management Ltd0 to 6130
7162Pannells Financial Planning Ltd14 to 24520
7217Lovewell Blake Group07 to 13260
73N/ATimothy James & Partners Ltd14 to 24610
7422Ring Associates Ltd07 to 13350
7517Lighthouse Group25 or more3,300
76N/ALifetime Financial Management Intermediaries Ltd07 to 1325
7766Attivo Group14 to 24370
7884Lomond Financial Management Group Ltd07 to 13190
79N/AKBL Group0 to 61,400
80N/ASacre Associates LLP07 to 13470
8133Fairstone Group25 or more4,100
8224Canaccord Genuity Group25 or more940
83N/AAFWM Ltd0 to 6120
84N/AMutual Financial Management LLP07 to 1359
8575Loveday & Partners Ltd14 to 24480
8674Hargreaves Lansdown Group25 or more33,000
8739Best Practice IFA Group Ltd25 or more2,800
88N/AReeves Independent0 to 660
89N/AFrancis Clark Financial Planning Ltd14 to 24410
9030Succession25 or more5,900
91N/AHugh Davies Associates Ltd0 to 682
92N/AMartin Aitken Financial Services Ltd0 to 6210
93N/AAscot Lloyd Group25 or more2,800
94N/AOrigen Financial Services Ltd25 or more1,400
95N/AFurnley House Group07 to 13100
96N/AEdison Wealth Management Ltd0 to 6120
9785Investec Group25 or more8,200
98N/AAlan Steel (Asset Management) Ltd07 to 131,100
99N/APinnacle Financial Planning Ltd14 to 24330
100N/ARBS Group0 to 63,900
The list includes only firms whose primary business (i.e. majority of sales) is classified by Matrix Solutions as financial advisers, wealth managers and banks are included.  
Individual firms that are affiliated with a wider group are included within the figures for the wider group and appointed representatives are included within the figures for their principal, regardless of whether they could appear individually.  
The figures for the list have been rounded up and include assets invested in retail investments and pensions, reported to Matrix Solutions by our Financial Clarity partners, other assets, such as those invested in discretionary funds or portfolios, hedge funds etc. are not included. 
Matrix Solutions receives data directly from fund managers covering 90 per cent of the UK retail investment market into their Financial Clarity product. Fund manager data is further supplemented and enhanced with platform feeds. The top 25 fund managers account for 80 per cent of retail assets under management and Matrix Solutions received sales data from 22 of these investment houses. Sixteen platforms submit data to Matrix Solutions, including 15 at fund and intermediary level. High platform coverage provides visibility of platform sales from fund managers not currently contributing directly to Financial Clarity. 
CF30 numbers may include qualified staff who are actively advising customers. Certain firms no longer have CF30’s registered against them following a change in the regulatory regime in March 2016. 
Matrix is an ISS Market Intelligence company. 

 

Damian Fantato is the deputy editor of IC sister title FT Adviser