Financial advisers: who they are and how to check they are authorised
Who may give investment advice, how they are paid and which checks to make before entrusting them with your savings.
A regulated activity
Giving personal recommendations on financial instruments is, in the European Union, the United Kingdom, Switzerland, Canada and most other countries, an activity reserved for authorised and supervised firms and individuals. Anyone who is not authorised may not do it, whatever titles they give themselves.
This website, for example, does not give advice: it explains general concepts that are the same for everyone. Advice is something else, because it starts from one person's specific situation and ends with a recommendation that concerns them.
The register is the reference point
In every country the supervisory authority keeps a public register of authorised firms and, often, of individual advisers. In the United Kingdom it is the register kept by the Financial Conduct Authority; in the European Union each national authority has its own, and firms authorised in one member state may operate in others under specific rules; in Canada registration is checked through the provincial securities regulators.
Names and categories differ, but the principle is the same everywhere: there is an official list, and being on it is the precondition for giving advice.
How they are paid
This is a question to ask openly. An adviser may be paid directly by the client, through a fee, or indirectly, through the commissions on the products they place, part of which is passed on to them. In the second case there is a potential conflict of interest, which the rules require to be managed and disclosed. In some countries, including the United Kingdom, commissions on retail investment advice are banned.
Advice that describes itself as "independent" may not, as a rule, accept payments from product providers. In any case the client is entitled to know, beforehand and clearly, how much the service costs and how much the products cost, in money and as a percentage.
The checks to make
First: look up the adviser's name and the firm they work for in the official register, getting there yourself and not through a link you were sent. Second: check on the supervisory authority's website that they do not appear on the warning list of unauthorised firms. Third: never hand over cash or make transfers to an account in the person's own name: payments go to the firm.
And some questions a serious professional expects: with which firm are you registered, how are you paid, what are the total costs, what happens if I want to leave. The reaction to questions says a lot: someone in a hurry to close, or irritated by a request for clarification, is not acting in the client's interest.
Educational and informational content only. It is not personalised financial, investment or tax advice. All investments involve risks, including the possible loss of invested capital.
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