What is an IFA
These are personal finance specialists who will deal with anything from pensions to investments to mortgages. Many will specialise in one particular area.
Traditionally IFAs have been more strongly regulated, than “mortgage brokers”. (The latter have become better regulated, particularly since the crash of 2008).
IFAs may not specialise in mortgages but they easily understand the issues involved. They have access to computer programmes, which scan the whole market to find the best available mortgage for your specific needs.
How to find an IFA
The best way is via word of mouth. But make sure that you are being recommended someone who helped your friend with a mortgage and not an IFA who’s an expert in an unrelated area.
Also think twice about using relatives, friends of friends etc. on the principle that business and pleasure are best not mixed.
What do they charge?
An IFA will usually see you free initially and then charge either an hourly fee – or you can agree on them taking a commission, which is more common.
If so this normally comes from the company whose products they have recommended.
If you pay commission the IFA has to reveal what it is.
Fees versus commission
The number of fee based IFA’s has grown rapidly in recent years. The idea with fees is that you pay these charges up front so that there’s no suggestion that the IFA is reliant on any commission from the mortgage plan they recommend.
In other words the advice is genuinely independent.
But when you’ve added all the letters and follow up you may find that paying commission would have been cheaper. However you will be sure that what was recommended really was in your best interests.
The IFA should be able to give you a quote. Many will give you a guaranteed fee ceiling.
Seven Questions to ask your IFA
– How long have you been in business for?
– What qualifications do you have? (See IFA Qualifications)
– Are you truly independent?
– Do you specialise in mortgages?
– Do you have a few references I can call? ie former happy clients.
– Are you insured against giving bad advice?
– How will you get paid? Fees or commission?
It may be best to judge your IFA on how they deal with your questions. Directly? Or do you have difficulty in getting a straight answer.
Any good IFA should come over as straightforward and honest. If they don’t specialize in mortgages they should be mature enough to know that recommending a more suitable IFA to you is good business all round.
Anyone claiming to be an IFA has to be qualified. Qualifications are issued by a several different examining and awarding bodies, so there are various certifications that can be issued.
The Financial Conduct Authority, requires an IFA to have at least passed the Certificate in Financial Planning (Cert FP) . Any IFA should have this listed after their name. There’s also the Diploma in Financial Planning (DipFP) and the Advanced Diploma in Financial Planning (ADFP).
Most – but not all – IFA qualifications are graded by the national Qualifications and Credit Framework (QCF). QCF Level 4 qualifications are the minimum level qualification that an IFA needs to have in order to practise.
For a detailed analysis of the confusing area of IFA qualifications start with http://www.unbiased.co.uk/ifa-qualifications