The number of people in the UK who seek out financial advice is increasing every year.
There are many potential factors for why this is the case. High inflation and the cost of living as well as law and policy changes could be having an effect of people’s understanding of the importance of having a financial plan.
It could also be true that increased exposure to conversations about money and finances on social media is changing people’s willingness to talk about their finances and address any potential concerns or issues they have.
Whatever the reasons might be, if you find yourself at a point where you are ready to seek financial advice, you might be asking yourself if a bank or an independent financial advisor is right for you. This article aims to help you address that question by highlighting the pros and cons of speaking with a Bank or speaking with an IFA.
Relationship
Before we dig into the difference and similarities between banks and IFAs, it should be noted that finances can be difficult to talk about. Making sure you have, or think you can develop, a trusting working relationship with whoever advises you is important. Without trust, you might not tell the whole truth. Without the whole truth, an advisor cannot give the best advice for you.
Some people might take comfort in the fact that banks usually have a long-standing reputation and a perceived level of credibility. If this fact helps you feel comfortable and immediately build trust, then taking a meeting with a bank based advisor makes sense.
The Similarities
Both an Independent Financial Advisor (IFA) and a Financial Advisor at a bank should be operating with the intention of providing the best advice for you. They will both have received qualifications and certifications which allow them to work as a Financial Advisor and they will both be under the governing body of the Financial Conduct Authority.
Whether an independent or bank-based advisor, both should be able to advise on things such as managing investments, pensions and retirement, estate planning and general financial plans. The differences begin to come in when we start looking at the specific products that can be recommended.
Working with a Bank Based Financial Advisor
A financial advisor who works at a bank will have limitations on which providers they can recommend. Since they are employed by the bank, the bank’s products, and products of companies affiliated with the bank, will be what they can recommend. This doesn’t mean their advice won’t be suitable for you, but it could mean they are unable to recommend the best product (ie. pensions, investment fund, mortgage, etc) for you.
Bank based advisors do have access to further products which might be helpful depending on your circumstance. Loans, mortgages, investment funds, saving options – if these factor into your financial plan, the bank might be able to provide all of that. Yet because the banks will look to make you use their own products, it means they are more likely to be ‘selling’ something. This could potentially be because they have targets to hit or earn commission on these transactions.
Working with an Independent Financial Advisor
First and foremost, IFAs are independent. This means they have access to the whole of the market and are not tied to any specific providers or products. This immediately opens you up to more options for pensions, investments, etc.
Due to this level of access, an IFA may have more awareness across the entirety of the market. It is in their interest to have in-depth knowledge of the options available as it enables them to provide you with the best advice. Though IFAs may have connections with certain providers due to relationship history or agreed discounts, this has the potential to benefit the client as the savings might be passed on to them.
It is also more likely in the IFA space to specialise in an area. This means that if you have a complicated issue to address, say with inheritance and trust planning, an IFA who has years of experience specifically with inheritance tax could be an asset to your plans.
The Best Decision is What's Right for You
The choice between a bank-based financial adviser and an Independent Financial Advisor depends on your individual needs, preferences, and the level of flexibility you’re looking for in your financial planning. If you value convenience, a bank advisor may be the right choice. However, if you’re seeking tailored advice an IFA will offer more personalised guidance. The most important thing is to find an advisor you trust and feel comfortable working with.
For a free, no obligation initial meeting get in touch with our team today.
