What is an independent financial adviser?
An independent financial adviser, or IFA, helps you make financial decisions and can recommend suitable investments within the service you agree. Independence describes how the firm considers relevant options. You still need to check its experience, permissions and costs.
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What does an independent financial adviser do?
The starting point is your situation: what the money is for, when you need it, existing commitments and how much uncertainty you can afford. A recommendation should follow that understanding, rather than start with a product.
Depending on the firm’s scope, the work might include planning retirement income, reviewing pensions and investments or deciding how an inheritance fits your longer-term needs. Ask what will be delivered and whether implementation and later reviews are included.
What does independent mean in practice?
For retail investment advice, the FCA sets requirements for an independent firm’s assessment and selection of relevant products. Independence does not mean that every product in existence must be examined for every client.
A firm can provide focused independent advice within a defined market if the relevant requirements are met. Ask which market and types of investment its service covers, and what happens if your needs extend beyond it. The answer should describe the work you will receive.
Source: FCA Handbook: independent and restricted investment advice
When might an IFA be useful?
For a basic factual question, free guidance or an official explanation may be enough. Paying for advice is more useful when you can identify the decision and the work you want help with. Independence alone does not determine whether advice is worth its cost.
What should happen in the first conversation?
Explain your objective, an approximate picture of your finances and any deadline. Ask whether the firm takes clients in that situation, who you would work with and whether the initial conversation is free.
Before paid work begins, establish the service, fee, information required and expected output. A full fact-find may follow, covering income, assets, debts, objectives and risk. Keep sensitive documents for the verified firm’s agreed process.
How do IFAs charge?
Ask for the price of the advice, any implementation and any ongoing service separately. A quote may use a fixed amount, an hourly rate or a percentage. Establish what triggers payment and which platform, fund or product charges sit outside the advice fee.
For a one-off decision, compare the cost of that project with the commitment involved in an ongoing service. If continuing reviews are proposed, ask what is reviewed, how often and what would happen if you stopped the service.
How do you check an independent adviser?
Use the FCA’s records to check the firm and relevant individual. Compare contact details with the official record, establish the permissions relevant to the work and investigate any restrictions or warnings. For an appointed representative, also identify the principal and confirm the work it takes responsibility for.
Then obtain the independent or restricted disclosure for your actual service. FCA status, independence, qualifications and client reviews are different checks. None should be used as a substitute for the others.
Ask how independence is applied in the recommendation
A useful explanation connects the firm's stated scope to the options relevant to your circumstances. Ask how it researches those options, identifies unsuitable ones and records the reasons for its conclusion. Independence does not require every reader to receive the same recommendation.
Clarify the service's boundaries. An independent investment adviser may still need a solicitor, accountant or specialist adviser for other parts of your problem. Ask who takes responsibility for each part and whether any referral creates a commercial relationship that should be disclosed.
For an illustrative pension discussion, independence is not demonstrated simply by naming several providers. You also want to understand whether retaining the current scheme, using different income options or delaying a decision has been considered where relevant. The written explanation matters more than the length of a provider list.
Check costs and ongoing obligations separately. Independent advice can use fixed, hourly or asset-based charges and may be provided as a project or ongoing relationship. The label describes advice scope, not a promise of low fees, continuous support or superior investment returns.
Sources and further reading
FCA Handbook: independent and restricted investment advice ↗
MoneyHelper: choosing a financial adviser ↗
