Types of Debt Consolidation Advisers

It used to be simple to understand where you were, but someone in their wisdom changed it, and now we have a few variations on a theme.

1.Independent Financial Advisers (IFA)

In simple terms the elite of financial planners are the Independent Financial Advisers - IFAs. They are completely Independent and have to offer you the option to pay by fee as well as access to the whole marketplace for your respective financial solution. For those customers who want completely unbiased advice and respect that, advice is vital. We are fiercely Independent.

2.Whole of Market

There are another few tiers but next in the list is a type of adviser called whole of market. They are similar to an Independent financial adviser but unfortunately are only paid by commission. Clearly if they don’t offer a fee option they need to sell a commission based product to get paid. Without this ability to charge fees a non commission paying solution could be discounted in favour of a commission paying solution.

3.Independent Mortgage Broker

There are advisers who call themselves Independent mortgage brokers. This really has no meaning as they don’t offer Independent financial advice as above. They are not required to give Independent Financial advice.

4.Multi Tie or Tied Salesmen

Lastly there are advisers who tie themselves to a small group of companies. They are called multi tie or tied agents. It really is quite difficult to understand why they do this, as it vastly reduces the potential solutions available to their customer, and is counter productive in terms of ensuring the customer gets the right solution. Often by tying to just one company they negotiate bigger commissions for themselves. A common excuse used by such advisers is that they use an outside company to research all the best companies available and that’s how they have chosen to tie to just a few! If this really was true they would choose to be Independent and would then have the research completed in-house and ensure the customer always had the right solution available to them as well as being able to be paid by fees as opposed to commission.

Here is an example from such a multi-tied agent* and we'll translate it for you at the bottom.

“We have positioned our firm as a specialist broker whose products are designed to meet the needs of those who may not be catered for by the 'high street' lenders. This is because the majority of our clients are 'non-conforming' or have some adverse credit profile. We source our mortgages through a selected panel of specialist lenders and not the market as a whole.
If we are successful in arranging your mortgage then we shall charge you a fee. For adverse mortgages our fee is 1.50% of the mortgage advance with a minimum £1950."

Translation
This means they wont give you any credit advice but will just charge you a fee if they arrange a mortgage with a provider. They have restricted their lenders to a small few, which means that the best provider available is unlikely to be available to you, as they may not be using them, having restricted their solutions. Moreover their fees are at least 50% more than ours and we are the FT Mortgage Adviser of the Year and Non Conforming Adviser of the Year for 2005, 2006 and 2007.