Investigate before you invest

Being able to invest with confidence is a critical part of saving for retirement and managing your money in retirement.

However recent research by Consumer shows not all financial advisers offer the same quality of advice – and the advice from some financial advisers is "scandalously poor". The research found cases of poor analysis, unclear costs, and financial advisers portraying themselves as independent when they're not.

New legislation and regulation governing the financial sector is due to come into force next year, including a code of professional conduct which all authorised advisers will have to comply with.

In the meantime, if you’re thinking of investing, first do your own homework on the financial adviser or company you plan to use to help you make your investment decisions. Look closely at the disclosure statement every adviser has to give you, by law, before they take you as a client. 

It’s essential you find someone you trust and feel confident with. An adviser should understand your financial situation and your investment goals and recommend investments that suit you.

Be prepared to shop around to find the right person. Don’t be afraid to ask for explanations and keep asking until you understand.

You need to know:

• exactly what it is you’re being advised to put your money into
• who will actually hold your funds
• the level of risk you are taking on
• why your adviser is recommending a particular investment for you

Sorted's Investing section has an advice checklist of what to ask before signing on with a financial adviser. As well as risk and investment recommenders to work out how much risk you should take and what investments might suit you.

You can also order Sorted’s free Investing booklet online or by calling 0800 SORT MONEY (0800 767 866).

Published 13 November 2009