Independent financial advisor

Independent financial advisors give advice about products such as pensions, life insurance, mortgages, savings, investments and financial protection policies. They are called independent because they can advise about products and schemes from the whole market – they are not tied to dealing only with one supplier.

Also known as:

Financial advisor

Work activities

Independent financial advisors (IFAs) provide financial advice to help their clients to reach their financial goals in a way that suits them best. They also make arrangements for that advice to be taken up if the client wishes. Clients could be seeking investment advice for the short-, medium- or long-term. The products that IFAs advise on include things like:

Mortgages.
Life insurance and income protection policies.
Mortgages.
Savings accounts.
Unit trusts, investment trusts and open-ended investment companies.

Some IFAs specialise in one area – for example, retirement planning.

When the IFA first meets a client, they discuss the client’s current situation, carrying out a detailed fact-finding exercise in order to help them to identify their specific financial needs. They must also find out the level of risk the client is willing to take when investing money to achieve those goals.

IFAs might have to travel to the client’s home or place of work for these meetings, although most client meetings take place at the IFA’s office. Once the client’s requirements have been identified, the IFA then researches the financial market for appropriate solutions and recommends different options to the client. The client might then ask the IFA to act on the recommendations (for example, by making arrangements for a policy to be set up) or to do further research. IFAs are legally required to keep a separate file on each client, where notes of every meeting, internal documents such as the fact find, and copies of all correspondence must be kept. They must also keep detailed files covering the research that they have undertaken on products, and companies whose products they might recommend, which show the factors used by the advisor for assessment and client suitability. IFAs might have one or more paraplanners who do this research and analysis work.

The IFA must write a detailed explanation of the reasons behind their choices, how they meet the client’s particular needs and any financial risks involved. Many advisors provide a comprehensive financial planning service to their clients. Professional financial planners aim to help their clients define, review and reach their financial goals with less risk and cost than if they tried to do this by themselves.

A typical financial plan will contain some or all of the following reports, in which the financial planner makes professional recommendations:

Life goals planning.
Cash flow planning.
Investment planning.
Personal risk planning.
Personal protection planning.
Tax planning.
Retirement planning.
Estate planning.

Personal qualities and skills

As an independent financial advisor, you’ll need to be:

Sensitive when giving advice to clients, sometimes in difficult circumstances.
Methodical and thorough when doing research and writing up reports.
Able to analyse and present technical information in an understandable way.

You should have:

Excellent communication skills.
The ability to make strategic decisions.
IT skills.
You will probably need a full driving licence.

Pay and opportunities

The pay rates given are approximate. Independent financial advisors (IFAs) earn in the range of £23,500 a year, rising to £45,000 with experience. Higher earners can make much more. Advisors have to agree their fee in advance with the client as well as how it is to be paid. This fee could then be taken from a product which the client buys or invests in. Other benefits could include profit-related bonuses, a company car, medical and life insurance, and perhaps contributions into pension plans.

Working hours can be erratic. Most divide their working hours between office/administration work and meeting potential and existing clients. Sometimes it is necessary for client meetings to take place in the early evening and occasionally at weekends.

Employers are firms of independent financial advisors, financial planners, wealth managers and some insurance brokers and pension consultants. Opportunities for IFAs occur in towns and cities throughout the UK.

Some IFAs are self-employed. Some work from home or rent an office.

Where are vacancies advertised?

Vacancies are advertised in the following places:

Local/national newspapers.
Employers’ websites.
The Government’s Find a Job service.
Job boards.

Entry routes and training

Some people start by gaining experience in a financial or insurance company, bank or building society, as a paraplanner. Paraplanners support financial advisors by researching products, drafting reports and keeping records. Others start as administrators or sales advisors. They can then study part-time for qualifications that will enable them to become independent financial advisors.

You can become a paraplanner via a level 4 (higher) apprenticeship programme. This is a good way into the role because you will be trained while working a paid job and studying towards relevant qualifications. You could then work your way up to the role of independent financial advisor.

An alternative apprenticeship is in the level 6 (higher) programme in the role of financial services professional, which may allow you to specialise as an independent financial advisor.

Independent financial advisors must be registered with, and authorised by, the Financial Conduct Authority (FCA).

Fully qualified independent financial advisors can progress by dealing with more complex client situations. There are further qualifications which many IFAs choose to take. They can progress to senior, manager and director positions. Some independent financial advisors become self-employed or start their own business.

Rehabilitation of Offenders Act: Working as an independent financial advisor is an exception to the Rehabilitation of Offenders Act 1974. This means that you must supply information to an employer about any spent or unspent convictions, cautions, reprimands or warnings, if they ask you to. This is different from other careers, where you only have to reveal information on unspent convictions if you are asked to.

Qualifications

Entry to a trainee post might be possible with A levels or equivalent. Many applicants have a higher education (HE) qualification, such as a degree. For entry to a degree in financial services, the usual minimum requirement is:

Two to three A-levels.
GCSEs at grades 9-4 in two to three other subjects.
English and maths GCSEs at grades 9-4.

Alternatives to A levels include:

Edexcel (BTEC) level 3 National qualifications
International Baccalaureate (IB) diploma.

However, course requirements vary so check prospectuses carefully.

To begin a higher apprenticeship, you’ll need two relevant A-levels plus GSCEs in maths and English.

Adult opportunities

Age limits: It is illegal for any organisation to set age limits for entry to employment, education or training, unless they can show there is a real need to have these limits.

Many entrants have a background in other areas of financial work. This could be as a bank officer, or a customer advisor in a building society or insurance company, for example.

If you don’t have the qualifications needed to enter your chosen degree or HND course, a college or university Access course (for example, Access to Business) could be the way in. These courses are designed for people who have not followed the usual routes into higher education. No formal qualifications are usually needed, but you should check this with individual colleges.

Related careers

Accountant
Bank manager
Customer service advisor (banking)
Insurance broker
Insurance sales advisor
Paraplanner
Stockbroker
Tax advisor