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Guide to Financial Advisors: Everything You Need to Know

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The role of a financial advisor is to do exactly what it says on the tin – they provide advice to individuals or companies with respect to their financial direction. Interestingly, most people think that they will never require the services of a financial advisor, however that couldn’t be further from the truth.

Whether you have recently inherited assets, you’ll looking to obtain an annuity, or need assistance with releasing equity from your home, you might very well need guidance from an experienced financial advisor.

In our Guide to Financial Advisors, we’ll cover all of the pertinent points that we think you should know. This will include key factors such as what a financial advisor actually is, when you might need one, and what you should do to ensure you are only receiving guidance from the right advisor.

What is a Financial Advisor?

In a nutshell, the overarching aim of a financial advisor is to assist you in your quest for financial guidance. The actual term itself is quite broad, not least because it can be broken down into a range of different financial segments. This can include advice relating to insurance, savings, inheritance, investments and even pensions.

It is important to recognize that there are two types of financial advice that you can receive. Notably, this will either be from an independent financial advisor, or a restricted advisor.

Let’s break these down in more detail to make sure you understand the key differences between the two.

Independent Financial Advisor

An independent financial advisor has the remit to recommend a full range of financial products and services available in the marketplace. They will initially seek to ascertain what your current situation is, before making an independent recommendation to both grow and protect your wealth.

As the name suggests, an independent financial advisor is not tied to a specific company, product or service, meaning that effectively, the advice that they give you should be in your best interests. Regulatory approval to offer advice as an independent financial advisor will depend on the jurisdiction that you live in.

However, in the UK, it is fundamental that you only seek advice from an independent financial advisor that is registered with the Financial Conduct Authority (FCA).

The FCA themselves state that if you use an advisor that is not approved by them, and you subsequently run into problems, you won’t be covered by the Financial Ombudsman Service (FOS), nor the Financial Services Compensation Scheme (FSCS).

Now let’s take a look at what a restricted advisor is.

Restricted advisor

Unlike an independent financial advisor, a restricted advisor can only suggest and recommend a limited number of  financial products and services. In some cases, a restricted advisor will be employed by a company that offers services linked to the advice you are looking for.

Once such example of this is a pension company that is giving you advice on annuities. Alternatively, a restricted advisor might not be tied to a company per-say, but they are only allowed to give advice pertaining to a specific financial sector, such as insurance or real-estate planning.

Perhaps most importantly, restricted advisors can rarely, if ever, claim to be offering you independent advice. They are likely to have specific products or services that they aim to recommend, meaning that the advice you are receiving might not be in your best interests.

For further clarity on the differences between an independent financial advisor with that of a restricted advisor, check out this comparison table illustrated on the FCA website:

Independent and restricted advice: key differencesIndependent adviserRestricted advisers
Will consider all retail investment productsYesNo
Can focus only on a particular marketNoYes
Can consider products only from certain product providersNoYes
Has to explain to you the type of advice they offerYesYes
Can use ‘independent’ to describe the advice they offerYesNo
Incentivised to recommend one product over anotherNoNo

So now that you know the two types of financial advisors operating in the market, let’s explore some of the key reasons why you might need to use one.

Why Would you Need a Financial Advisor?

Most forms of financial decision-making do not require the services of a financial advisor. For example, low-level financial products such as credit cards, loans or car insurance can be assisted by accessing credible online sources that you’ll find in the public domain.

However, financial decisions of a higher magnitude, especially if the sums involved are of substantial size, might require expert advice from an experienced advisor.


Deciding whether or not to take out an annuity is a major decision, which if not utilized correctly, could result in detrimental consequences for your financial future. For those unaware, an annuity is a financial product that allows you to trade your life pension savings in exchange for regular income payments for the rest of your life.

There is no one-size-fit-all solution on whether annuities are right for you, not least because it will ultimately depend on the pension plan you have in place. In some cases, if you take out an annuity instead of opting for the pension you already have lined-up, you could be thousands of pounds worse off in the long-run.

In cases such as this, a financial advisor will be able to ascertain what the best course of action is for your individual circumstances.

Releasing Equity From Your Home

Ascertaining whether or not you need a financial advisor with respect to releasing equity from your home is a tricky one. On the one hand, you will only want to use the services of an independent financial advisor that has a direct specialism in mortgage-based finance.

If you don’t, then you might actually be better off obtaining advice from a mortgage broker. The latter is likely to have significantly more experience in the mortgage space and thus, will be able to provide you with the best deal possible.

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Inheritance payments are potentially one of the most crucial segments that require the services of a financial advisor – especially if the amounts involved are of significant size.

One of the key reasons that inheritance planning has become so complex is with respect to rising property prices. This means that should the value of your assets exceed the inheritance threshold, there could be notable liabilities upon death.

By seeking a highly experienced independent financial advisor, you’ll be able to ascertain if and how you can reduce your tax liabilities, whether assets can be transferred, and potentially, if you can avoid paying tax at all.


The benefits of keeping savings in a bank account have very quickly become redundant, not least because of prolonged ultra-low interest rates. Then add in the effects of inflation, and your bank account savings are ultimately losing real-world purchasing power.

As such, if you are in receipt of a notable savings account, then it might be worth speaking with an independent financial advisor to ascertain what your best options are.

Your advisor might suggest placing some cash in to low risk investment products such as government and corporate bonds or blue-chip stocks. This will at least allow you to beat inflation.

Ultimately, the above scenarios are just a few example of why you might need a financial advisor. If you need assistance when making a financial-based decision, then it might just be worth employing the services of an advisor.

In the next section we’ll briefly discuss how costings work.

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How Much Does a Financial Advisor Cost?

How much a financial advisor costs will depend on a whole range of factors. This could include whether the advisor is independent or restricted, or based on how complex your circumstances are.

In the majority of cases, the initial consultation should not cost you anything, however you should always check this before you meet. When it does come to commission, this will generally come in the form of a percentage fee, fixed fee, or a fee charged on an hourly basis.

  • Percentage fee: This is generally utilized when the advice is needed on an ongoing basis. For example, if you require a financial advisor to manage your savings fund, then you’ll likely pay an annual percentage fee.
  • Fixed fee: Fixed fees are generally charged when you require advice on an individual service. For example, a one-time inheritance tax project, or whether or not to obtain an annuity.
  • Hourly rate: An alternative costing model that some financial advisors utilize is an hourly charge. This can be a risky route to take, not least because validating what work has actually been done can be somewhat challenging.

How do I Find a Financial Advisor

Choosing the right financial advisor will ensure that you receive the best advice possible for your individual circumstances. First and foremost, it is crucial that you check whether the advisor is an independent financial advisor or restricted financial advisor.

Next, it is then important that you check whether the advisor is registered with your respective regulatory body. Once again, in the UK this will be with the FCA, and you can check the register here.

If you need further assistance in your search and you’re based in the UK, then it might be worth using an online platform such as

The Unbiased network has a comprehensive network that hosts more than 27,000 financial advisors, alongside solicitors, accountants and mortgage brokers.

You can perform a bespoke search query to find an advisor for your specific needs, and you can also stipulate key factors such as the qualifications of the advisor, and where they are based.


Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased

1 Comment

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    Camilla Jain Reply

    It was such a nice and wonderful advice from the financial experts. I highly recommend tracking your daily expenses and avoiding unnecessary withdraw of money from saving accounts. A professional financial advisor can guide you well on what key steps a client has to take for improving his/her financial position and grow their current income.

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