Financial Advisors

In the wake of a number of mis-selling scandals, an expert explains how you can you tell if your financial adviser has the right qualifications to meet your needs.

As the number of investment, mortgage, pension and insurance products multiplies, more and more of us are turning to an expert who can guide us through the maze. Finding a local independent financial adviser (IFA) is relatively easy. Friends or relatives can often recommend one, or you can quickly obtain details of a local IFA online. But what if, like increasing numbers of people, you are looking for an adviser with additional knowledge and expertise to match your specific advice needs?As with many other professions, financial advisers will often list an alphabet-spaghetti string of letters after their name. At first glance these letters will tell you very little, and the chances are you will still have some doubts about their value. So how do you spot the ones that really say something about an adviser's ability, and how do you compare the value of one qualification with that of another?

'Must have' qualifications

All financial advisers are required by their regulator, the Financial Services Authority, to pass an exam known as the Financial Planning Certificate (FPC) or an equivalent, before they are allowed to provide financial advice. The FPC is a basic-level exam, which many experts equate to a challenging GCSE, perhaps an A-level, in difficulty. From there it is possible to go further, in much the same way as someone with A-levels can go on to obtain a degree, a masters, and eventually a PhD.

Advanced qualifications

There are two types of advanced qualification: those awarded for general financial advice, and those awarded for specific product advice, such as pension or mortgage planning.Comparing qualifications is hard because different organisations have been allowed to create exams for various parts of the financial services industry. But in recent years, many of the exam bodies have tried to create similar quality levels to each other. There are too many advanced qualifications for general financial advice to mention them all here, but the most popular is the Advanced Financial Planning Certificate (AFPC).

Product qualifications

If you are looking to buy a home or re-finance your existing property, there are two main mortgage qualifications: the Mortgage Advice Qualification (MAQ) and the Certificate in Mortgage Advice and Practice (CeMAP). If you are seeking someone with advanced expertise in pension planning, look out particularly for advisers holding qualifications G60, the CIB pensions paper, or the Retirement Provision Diploma (RPD). For investment advice there is a broader range of advanced qualifications. The G70 is awarded for an adviser demonstrating general investment expertise, while the Securities Institute awards a Diploma for practitioners in securities, derivatives and investment management. Others to look out for are the Certificate in Investment Management (Cert IM), the Investment Management Certificate (IMC) and the Investment Management Asset Allocation Qualification (IMAAQ).

Not just exams

As we all discover from time to time, having letters after your name is no guarantee of intelligence, professional ability or decent service. Beyond qualifications, you should be choosing a financial adviser based on factors such as location, value for money, and how you get on. However, there is often a correlation between a good adviser and a commitment on their part to learn as much as possible about a particular subject and pass extra voluntary exams. More and more advisers find that having additional qualifications helps keep them up to speed on personal finance topics. Indeed, many awarding bodies insist that to keep those precious letters after their name, advisers must maintain records of continuous professional development.