Getting a Better Financial Adviser

By the time you realise you need a new and better adviser you are likely to have collected a lot of financial baggage and be the proud owner of an unco- ordinated assortment of investments and insurance plans sold by an even less co-ordinated range of financial institutions.

Charges are very important but should not be the sole selection criterion. If your investment company turns out to be one of the worst performers in its category, it is little comfort to know that the charges are modest.

Your new adviser cannot plan for your future goals if he or she doesn't know where you are now. So, one of the adviser's first jobs is to evaluate what you have already got so that the firm can prepare a full fact find. To do this it will need to contact all of your existing providers and notify them that it has taken over as your adviser. At the same time it will send a pro-forma to providers to get an up-to-date picture of the terms and conditions of your insurance policies and investment plans. Many people accumulate duplicate pension plans and insurance policies. Overall you might be paying the right amount in pension contributions for your age and earnings but the cost in policy fees and commissions is likely to be excessive.

When you transfer the agency agreement to the new firm you need to discuss how your adviser is to be remunerated. With most insurance policies and regular premium investments the provider is likely to pay a commission to your existing adviser. The simplest way to deal with this is to transfer the commission payments to your new adviser who will accept this as part of the overall remuneration, if the firm works on a commission basis, or offset it against fees.

In the case of an investment plan, what you can't do is arrange to reinvest the commission in your fund once it is established on a commission-paying basis. This is not the fault of the adviser. Insurance companies in particular have notoriously archaic systems designed to deduct commissions for advisers from your premiums. Once a plan or policy is set up on this basis, it is virtually impossible to change it.

For the same reasons, if you dismiss an adviser and deal with an insurance company directly, in most cases you will not benefit from reduced costs. Instead the insurance company will pocket the commission it would otherwise have paid to your adviser.

If you plan to use your adviser on a regular basis you should have a written agreement that sets out the firm's terms and what services it will provide.

In the terms of business client agreement (see above) your new adviser should explain its services clearly and set out the level and method of charging. Don't entrust the adviser with anything until you have signed this agreement. This is your assurance that the firm will act within the guidelines and boundaries agreed and if it fails to do so the agreement provides you with access to redress and eligibility to the Financial Ombudsman's Service