Take care when you take advisers

Financial experts are not be feared. John Hancock negotiates his way through the tangle

For many people who should be buying a pension or an insurance- linked investment plan the prospect of coming face-to-face with a salesman, aka an "adviser", and inviting one into their own home for an hour of intrusive questioning, in the form of a fact-find, is more of a deterrent than a safeguard. But it should not be.

See it as at worst a necessary evil and at best as a genuine safeguard, to make sure the salesman/adviser only tries to sell you something which is appropriate to your particular personal needs, and that he/she explains why you could use the product on offer.

The Personal Investment Authority (PIA), with its "Training and competence rules and guidance", now requires high and measurable standards of training and supervision for people selling financial services. The costs of implementing such standards are high and so sellers must focus more than ever on productivity and the industry's sales people (now called advisers) are becoming very sophisticated in their approach.

The public, however, does not receive the benefit of similar high-quality training for the role of buyer. So what should you expect of a financial services adviser, whether independent or tied to a company, who calls to make a sale?

The initial approach should be at a reasonable time of day and advisers must state their name, the company or independent financial adviser (IFA) that they represent and the purpose of the call. They must ask whether it is convenient with you and leave a contact telephone number.

Before you sign anything you should expect at least two meetings.

At the start of the first meeting you must be given a terms of business letter and the adviser's business card.

During the first meeting, the time should be spent completing a fact- find, to assist the adviser in evaluating your requirements.

When the fact-find has been completed, you should be given time to read it. The adviser then goes away to analyse your needs and structure a financial plan to meet your requirements. If your needs are covered, the adviser should say so.

During the second meeting your adviser should present a personal financial plan based on information in the fact-find, establishing your needs, priorities and ability to pay. It will include advice and recommendations. If you understand and agree the advice, which must be written on the fact-find, you should sign to that effect. As with writing a cheque, (and this is more important than any cheque) leave no space between the recommendation and your signature.

Also during the second meeting, you should be handed a key features document detailing the main points of the products recommended. Should that product selection change, a new document must be produced before any sale may proceed, unless only a rider (say, waiver of premium) has changed then the new document must follow within three days.

At the time of making the recommendation or within three days, the adviser must provide a company illustration and brochure for each product recommended and, where relevant, such information as early surrender values, cancellation rights and tax implications.

If in doubt, ask. Do not feel foolish; it is your money.

The adviser must disclose charges within a plan to cover sales and administration costs.

When completing an application, sign nothing until all information has been entered. Check that it tallies with your understanding and initial any alterations. Never sign an incomplete form.

Pay particular attention to payment details. If yours is to be a single payment, cancel any direct debit included.

At the time of the application or before the issue of the cancellation notice, the adviser should give you a "reasons why" letter explaining the facts supporting any recommendation made.

When the policy is issued, check it is as you expected and as recommended on the fact-find.

If you make an inquiry at a later date, by telephone or letter, the adviser should respond within one working day.

If you have cause to complain about a plan, you should telephone or, preferably, write to the complaints manager at the company's head office. Your communication must be acknowledged by return with details of the insurance ombudsman's bureau. Should your complaint not be resolved within two months, the company will be obliged to advise you of the current position. If the company's final decision does not satisfy you then, within six months, you may refer your complaint to the insurance ombudsman.

Should your adviser move allegiance to a different company (mainly relevant for tied agents and company representatives) you will not be well advised to move your investment.

On the contrary, it will nearly always be best to maintain a plan, because it will normally be a long-term scheme with charges concentrated at the "front-end", which would be wasted if you surrendered the policy early.

There is no doubt that financial services plans can provide security and benefit for families and businesses. Remember though that they are there to serve you and you should not agree to any step until you fully understand its reasoning and cost.