What Kind of Personal Finance Advisers Are There?
Personal Finance Advisers come in different varieties. There are three types at the moment, with the prospect of a fourth on the horizon.
The main categories of financial advice are:
Direct Sales People
These advisers are directly employed by the organisation which provides the financial product or products. They have to be qualified personal finance advisers, but can only sell you products offered by their employer. This is the type of adviser you are most likely to encounter if you wander into a high street bank or one of the biggest building societies looking for help, or call up a big-name insurer direct.
Tied Agents
These advisers work for themselves or for a firm, selling a limited range of products. They agree to tie no one organisation and sell only the products of that firm. They may be able to link to a second or third firm where their main tied company does not operate in that part of the market.
For example, they may have a main tie covering life insurance, pensions and investments, and subsidiary ties for income replacement insurance and private medical insurance. Again tied agents have to be qualified but cone only advice on and sell you the product of the organisation they are tied to.
Independent Financial Advisers
These personal finance advisers, commonly known IFAs, are free to advice on products from across the market. They can pick and choose from the best providers for pensions, different companies for Isas and other firms for life or health insurance.
In theory an IFA can review the whole market before recommending a product to you. In practise, most have their regular favourites for particular types of business, a list which changes gradually from year to year.
There is a fourth type of personal finance adviser poised to shake up the market. At the time of writing, the British government was starting to relax the rules that say advisers have to be either tied or independent. It thinks there is room for a new category of adviser: one with multiple ties. That is, the adviser might sign up to sell on behalf of five or six different pension companies and do deals with ten different investment houses.
Initially, such multi-ties would only be permitted on supposedly simple products, such as stakeholder pension [http://www.seek4finance.co.uk/pensions]. In time, the rules might be relaxed further. IFAs do not like the idea. They fear it will lead to more confusion, self-invested personal pensions or an income drawdown scheme, an independent adviser is therefore essential.
Always look at all your family and personal finance circumstances before signing up for a policy. If you don’t really need it, then don’t buy it. The monthly premiums could be used to help build up an investment nest-egg.
Here, on our website, you will find accurate information on over 300 credit cards, plus loans, insurance and mortgage deals for efficient personal finance management.
Author: Liza Mathers
Article Source: EzineArticles.com
Alternative energy
Related posts: