With the UK facing its worst recession since the 1930s, consumer confidence in making financial decisions without expert advice has plummeted.
According to new research from Unbiased.co.uk, a professional advice website, one in three (34%) consumers say they would now feel less comfortable choosing a financial product without expert advice than 12 months ago.
And a similar share of the population (35%) have been hit already by "recession paralysis", admitting they won’t address any major financial decisions until things improve.
Since the aftermath of the initial financial crisis in October last year, Unbiased.co.uk has seen a 20% surge in searches carried out by consumers wanting details of local independent financial advisers (IFAs) who can help them deal with their financial issues.
David Elms, chief executive of Unbiased.co.uk said: "In boom times consumers have been more confident in making their own financial decisions, but in the current environment we are clearly seeing confidence levels dip.
"We are encouraged by the upsurge in people seeking advice, but concerned by those who admit they won’t review their financial situation until the economy itself begins to improve, which may prove a damaging decision."
The free, confidential find an IFA service handles more than half a million searches each year, and Unbiased.co.uk offers people the following five steps to finding the right professional financial advice for their needs:
1 Understand which type of financial adviser you are seeing – There are a number of different types of financial advisers, and not all of them are able to give you advice on products from the whole of the market. For instance financial advisers working in banks will tend to be tied to that bank’s product range, while "multi-tied" advisers can offer advice only on a restricted range of providers' products, based on commercial relationships they have in place. By contrast, IFAs are required to act purely on their clients' behalf, offering unbiased advice on the most suitable approach and products from across the whole financial marketplace.
2 Seek recommendations – Trusting someone with your financial matters is a very personal affair, so it can be reassuring to know an adviser comes highly recommended by a family member, friend or another trusted contact.
3 Find an adviser who matches your needs – If you rang them up, you would probably find that the four or five IFAs closest to your home or office vary greatly in their experience and the types of business they prefer to deal with. By using the Find an IFA search at Unbiased.co.uk, you can select local IFAs who specialise and hold advanced qualifications in financial areas relevant to your advice needs. In addition you can choose how you would prefer to pay for the advice, and specify a female or male IFA if you are more comfortable dealing with one or the other.
4 Ask questions – Like any service, it's important to contact more than one adviser before choosing which to take advice from. Having checked out their websites and any other literature, don't be afraid to ask questions about their service and qualifications, or to clarify anything you are unsure of. Request client references or testimonials to reassure yourself.
5 Payment method – Regardless of the type of advice you take, there will be a cost for your adviser's expertise. This is paid in one of three main ways – by an agreed upfront fee, indirectly through commission or by a combination of fee and commission. Make sure you are clear about your payment agreement before taking out advice.
Elms said: "The credit crunch is leading some consumers to seek financial advice for the first time in their lives, so it is important that they are aware of the different advice options available to them. Only an IFA can offer truly independent advice from the whole of the market.
"The financial advice market has become hugely more professional over recent years, led by the thousands of independent financial advisers who have chosen to improve their knowledge and skills with additional specialist and generic advice qualifications. People should aim for their first visit to an IFA to be the start of a lifelong, mutually fruitful relationship, so doing a little homework and ensuring you get the best possible adviser match can really make a difference."
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