Every so often, I get a phone call from some random British person who uses my first name and talks to me like they know me. They're always calling from some financial services company and they claim to be financial advisers.

I'm told that they're really salespeople who work almost entirely on commission, and they have a reputation for selling "savings plans" that mean that for the first 18 months, you're really paying the salesperson's commission rather than actually saving for yourself, and which aren't particularly good value in the long term anyway.

Is this true? If it is, how can you tell the proper financial advisers from the former used car salespeople? I have a hunch that proper financial advisers don't cold-call, and that when they meet you they don't ask for the names and phone numbers of ten friends before they do anything else, but I may be wrong there.

Hi Eeyore, I would always research any IFA I meet with, regardless on the country, most will have Linked-In profiles which will show their job history and how long they have been in their existing role. I personally will not cold call and grow my client base with referrals, only from existing clients who are happy with my service and willingly offer friends/colleagues to speak with. If your adviser does ask for names of your friends, I would ask for names of there existing clients to contact to ask for recommendations. If they cannot produce this maybe it is worth ending the relationship right there. I know I have a large individual client base of very happy clients and would confidential share any for a recommendation (with their consent).

If your IFA is worth anything they will only offer you a product which is suited to you. If this happens to be a "savings plan" you will have options with regards to what is called the Initial Contribution Period. If you are not happy with 18months being locked until you complete the period of saving, then that plan is not Suitable for you, ask your adviser to offer you something which has more access and flexibility. The 18months however, on most plans, is included in your final valuation, if you are saving for your Children's future for example for 18yrs then at the end of that period, the amount you contributed in the first 18months will be returned along with other contributions and growth.

I hope this helps

If was looking for an IFA I'd want to know if they are qualified and if they work for a fully licensed company. I'd also want to know their reputation by way of speaking to their existing clients/getting references/ checking them on LinkedIn etc.

How people get their clients is another issue but someone who constantly badgers and pesters is probably not going to be a good advisor - hence the general consensus that cold calling isn't a great method. It does seem to work for some but I constantly come across people who have been given poor solutions either because the advisor didn't explain the product properly or failed to get an accurate view of their client's needs - none of them complain about cold calling though and are more concerned about being fleeced

Regarding savings plans there are different kinds and it's not true that all lock you in to an 18month initial contribution period (some do, some don't depending on the term of the plan) or that you 'get that back' at the end of the term (different plans take their fees in different ways over the life of the plan and none give back fees - they are businesses not charities). What you get back will mostly depending on the performance of your underlying funds which is dependant on selecting funds that match your attitude to investment risk that beat their benchmarks (80% of funds do not beat their benchmarks). We tend to use larger fund houses with long standing reputations like Goldman Sachs, Morgan Stanley and JP Morgan as well as ETFs, structured notes from big institutions etc - but ultimately the investment will depend entirely on the client.


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