Money Mistake 1 Dealing Direct versus Financial Advice

Money Mistake 1 - Going ‘Direct’ - Dealing Direct versus Financial Advice

Other Mistakes: 2.  Not Bartering  3.  No Reviews   4.  Poor Quality Adviser  5.  Investment Timing

"Deal direct", "Cut out the middleman", "Direct offer".  "Comparison Websites".  "Discussion Forums".  "Consumer Champions".   Do not be fooled by Dotty Direct and the Direct Offer TRAP.

.....  and a little less cafeine for our Dotty here on the left.

Do you think you will get a better deal by dealing direct with an insurance company, investment house, bank, building society, mortgage company or via a comparison site?

The myth of dealing direct is that you cut out the 'middleman' and save commissions thereby getting a better deal.  Let us introduce you to 'Dotty Direct', she works for Dotty Direct Mortgages (a totally fictitious person and firm for this article).

Dotty Direct - The Debate - Dealing Direct versus Financial Advice

You telephone Dotty as you are interested in the mortgage you have seen advertised, she asks you some questions, she sends you three options for a mortgage, you choose one of the options and go ahead and apply for the mortgage.

You said 'yes' when she asked if you wanted critical illness cover, you said 'no' when she offered accident sickness and unemployment cover.

The application fees on the mortgage were a few pounds cheaper than you had been offered by a financial adviser and the interest rate seemed competitive and the monthly payments were affordable.  All was well.

Illness - A year later, you are off work with a long term serious illness:

• You try to claim on your critical illness cover only to find your illness is not covered by the Dotty Direct policy despite other similar policies covering this illness. 
• You nearly lose your home and eventually make it back to work but are forced to sell up and downsize property as your debts had mounted up.  You then find that there are early redemption penalties on your mortgage as you are locked in for another five years.

Complaint - You make a formal complaint about the ADVICE you have received when you took out the critical illness cover and the mortgage.

Reply:  Dotty Direct Mortgages reply by declining your claim for compensation

• They say that at no time did you receive advice. 
• You were asked a series of questions and based upon your replies you were offered some potentially suitable products. 
• You chose the products yourself.  
• You were issued with key facts documents detailing that there was no advice.  
• You are responsible for your own actions and should have read the smallprint.

You then go back and read through all the old documentation that you were issued with at the time only to find that what they have said is true. 

You then also spot that a commission was also paid to Dotty Direct.

Conclusion - Direct versus Advice

If you had taken independent financial advice you may have had some comeback if you were negligently advised. 

Going direct does not mean you obtain a better product, in the main all it means is that Banks, Building Society and Insurance Companies have to pay their own staff to do the work rather than pay external advisers to do the work.  Sometimes you will be offered better terms and sometimes you will not.

As Independent Financial Advisers (IFAs) we have daily access to over 3,000 mortgages and 28,000 different life, pension and investment funds.   In most cases, if you had taken independent financial advice, you are likely to have obtained the same or an equivalent deal to that offered by Dotty Direct or an even better deal if commissions are sacrificed to improve the contract.  Beware Johnny Salesman!

The biggest risk in dealing with Dotty Direct is whether you are receiving advice or not.  Going direct may mean that you have no comeback, receiving advice may mean you do.

ALWAYS CHECK WHETHER YOUR 'SALE' IS AN ADVISED SALE OR NOT. 

Award Winning Online Financial Advisers and Chartered Financial Planners:  We offer full independent financial advice along with commission discounts to ensure you obtain the right balance of a competitive financial services deal with advice from award winning experts. 

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