First Deadly Money Mistake Going Direct No Protection Not Always Cheaper

Why use a financial adviser or broker?    Am I not better ‘cutting out the middleman’?

This is the first of the five deadly money mistake videos explaining where people can go wrong with their money.  Going direct or accepting ‘direct to consumer’ (D2C) offers for insurance, pension or investments means you have not shopped around properly and may not be getting the best deal for your money.

Going Direct:  Either via online comparison services or using a provider’s own service.

• May be cheaper but equally it may not always be the best deal.
• You choose the product or service.
• Non-advised sales allow intermediaries and platforms to take full commissions.
• There is no financial ombudsman protection for you selecting the wrong product or service for your needs.  You are responsible for your own actions.
• Read the small print as you may have mis-bought rather than being mis-sold.

Financial Adviser/Broker:  To compare the whole market.

• Ensures that you get access ‘broker only’ deals but also a comparison of the whole market including D2C deals.
• Not all brokers search D2C deals as they may not be able to earn a commission, but if you have paid a fee for the service, you should ensure it is a true whole of market comparison.
• Financial Advisers and brokers are required to disclose fees to you and no commission is paid for pensions and investments (although there may be for insurance and mortgages).
• Beware that some advisers and brokers are tied to a particular provider or investment platform service.  Beware of hidden upfront X% fees as well as ongoing X% fees.  Make sure this has been disclosed.
• You should always seek an adviser that is fully independent, not tied to one or two platforms or providers and offers a whole of market service.
• It may be that brokers have economies of scale to secure discounts or even sacrifice fees and commissions to get you a better deal.
• The adviser or broker is liable for the suitability and affordability of the product or service that you have bought.
• You have full ombudsman rights and protection if there is a dispute or complaint.
• You have the protection of your adviser/broker’s professional indemnity insurance.

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