All animals are equal – but some are more equal than others. Or so George Orwell said in ‘Animal Farm’. If this means that all animals are NOT the same, then it certainly applies to those giving financial advice.
An independent financial adviser, or IFA, has access to all the mortgages, pensions, and funds products available in the UK. This ‘whole of market’ approach gives an IFA real ‘pulling power’ – the power to pull in any product, when building a financial plan for his or her client.
A typical ‘tied’ adviser at a bank or building society, on the other hand, may have a natty uniform and sing songs in their tv adverts (you know who I’m talking about) - but they generally have access to no more than 20 products.
And that, dear reader, is the real issue.
Would you buy paint from a shop that stocked just 20 colours? Probably not. But you’d buy a mortgage there. And have 25 years to regret it.
This is what makes the IFA’s whole of market approach so valuable. Staying just with mortgages for a moment, a report last year found that using independent advice will save you an average of £962 a year on your mortgage repayments.
The same report (by the Association of Mortgage Intermediaries) examined 10 mortgage scenarios, and in 9 out of 10 cases, the IFA achieved a better deal than tied advisers at the top 4 high street lenders.
It’s not just because of the limited range of products open to tied brokers. It’s because tied brokers, having such a small range of products to master before they are let loose selling to live customers, may have only the basic skills needed to sell those products. They may not have the advanced product knowledge of the IFA, nor the interview training to evaluate your needs, and match you to the exact product you deserve.
I rest my case.
Have you benefited from the whole of market approach of an IFA – or gone with a tied broker? Tell us about your experiences – blog here!
