Having a diligent approach, I believe, forms the cornerstone for the provision of sound debt advice.
Good debt advisers are like guides. They need to take the time to develop an understanding of their client’s circumstances, before offering any advice or proposing any solutions.
This might sound obvious, but a debt adviser needs to understand a client’s current personal circumstances in order to provide them with the relevant guidance on how they can best move forward.
After all, you can’t guide somebody to where they need to go until you know where they’re starting from, right?
It’s also true that a good debt adviser would never assume their client already has a complete understanding of the options that are available to them. When a client makes an inquiry about the possibility of entering an IVA, it would obviously be wrong to assume that this client already has a comprehensive knowledge of all their other options and that no further guidance is required.
Investing time to become familiar with a client’s personal circumstances also enables an adviser to focus their guidance most effectively, by highlighting those areas most worthy of their client’s consideration, which may otherwise have been overlooked.
The consultation process.
After an initial introductory conversation, most advisers will seek to consult their client over a pre-appointed telephone call.
A consultation allows the adviser to:
- Build an accurate picture of their client’s personal situation.
- Undertake an accurate appraisal of their client’s current financial position.
- Obtain the client’s list of creditors and the amounts owed to each.
During the consultation a good adviser should also:
- Declare the extent of their continued involvement within each process.
- Provide a full declaration of any fees, charges or commission they might earn.
- Volunteer any potential conflicts of interest they might have.
In conclusion, the adviser should be able to provide:
- An accurate description of all the alternative available debt solutions.
- A detailed ‘side by side’ comparison of each option.
- An explanation of the pros and cons of each option, relevant to their client’s circumstances.
This is what good debt advice looks like.
Guidance or Instruction?
I think it’s important to make the distinction between receiving good advice and being told what to do.
As the client, you should come away from your consultation feeling as though you have been clearly informed about the choices available to you, but it should be your decision which choice you opt for.
I don’t believe your adviser should tell you what’s in your best interests or instruct you on what you should do. I believe, instead, you should finish the consultation confident that you can make an informed choice for yourself.
It’s also important to stress that this advice should be provided free of charge. There shouldn’t be any pressure placed upon you to make a decision and there should be no obligation or conditions attached.
How good is your adviser?
Unfortunately, not all debt advice is equal and, in this instance, the adage ‘you get what you pay for’ simply isn’t true.
Therefore, you can’t assume that the quality of debt advice will improve just because you’re paying for it. Indeed, you could receive free advice which is excellent or pay for advice which is rubbish.
The quality of advice you receive will be down to the experience, motivation and morality of your adviser and the challenge for you as the recipient, is to determine whether what you’re being told is good, bad or indifferent.
Here are a few things to look out for during your consultation that might help you figure out if you’re receiving the best advice.
- Is your adviser listening to you?
- Are they giving you advice or telling you what to do?
- Are they in a hurry?
- Are they putting pressure on you to make a quick decision?
A good adviser won’t apply pressure or rush you to make a decision. They will allow you to proceed at a pace that you’re comfortable with. A good adviser also won’t make you feel as though you have to make any decisions immediately.
They will also guide you rather than issue you with a set of mandatory instructions.
Assessing the quality of the advice you’re receiving
There are several things you can look out for to help you work out whether you’re receiving good quality or poor advice.
- Does the adviser contradict themselves?
- Can the adviser answer your questions comprehensively?
- Does the adviser understand the advice that they’re giving you?
- Is the adviser trying to influence your decision in a particular direction?
When you’re receiving advice, listen very intently to what the adviser is telling you. Make sure that you understand what you’re being told.
When you ask questions, the adviser should be able to give a comprehensive answer and it should make sense to you. When someone tries to explain something that they don’t fully understand, it can quickly get out of control and fail to make sense. However, when someone understands the subject that they’re advising about, they will have no problem navigating it from different angles to explain different aspects of it clearly and concisely.
Be aware of any signs that someone is trying to steer your thought processes. Look out for closed questions that are potentially guiding you in a given direction. These could include questions like: You wouldn’t want to go bankrupt, would you? Nobody likes to go bankrupt, do they?
Those kinds of guiding comments are intended to steer someone to a particular conclusion. They are the kinds of comments you’re unlikely hear from a good adviser.
Improve your chances of receiving the best advice
Only seek debt advice from a trusted source. Only use advisers who are regulated by the Financial Conduct Authority (FCA) to give debt advice.
It’s a legal requirement in the UK to be licenced to give debt advice on any level, so make sure you are only speaking to regulated advisers.
You can easily check an adviser’s FCA reference number and their organisation’s details on the FCA website.
Their FCA licence number should be clearly displayed on the front page of their website. In the UK, you aren’t legally allowed to say you’re regulated if you are not.
Wherever possible, ensure that the advice you’re getting is not being driven by commission. You need to know that the adviser doesn’t stand to gain financially based on your decision going a certain way. In our opinion, this is what drives much of the mis-advice in this sector.
You can also improve your chances of being given good advice by allowing yourself plenty of time to have these consultations and not allowing yourself to feel rushed or pressured.
Be prepared to have your consultation over the course of two or three appointments. You shouldn’t feel as though you have to complete the decision-making process, or even understand everything, after just one phone call.
At IVAorg, we regularly have two, three or even four phone calls with our clients, to build up a full picture of their circumstances and lay out all the options for them before the client decides which option to choose.
Preparing for your consultation
It’s a good idea to write down any questions you might like to ask, or any concerns you have, because it’s very likely that once the conversation gets going, you’ll forget them. Just make a note of any of the points that you’ve read or points of interest that you would like to get answers to.
You should also have a decent understanding of your personal financial circumstances.
It can be useful to have your most recent pay slip to hand, so that you know how much you earn and how often you are paid. It is also useful to have a bank statement or two to hand, where you’ll easily be able to see your most frequent and repeated expenses, such as your rent or mortgage, council tax and other bills. Providing this information to your adviser will be essential to help them understand your current financial position.
Being prepared in this way can take some of the stress out of the consultation and it will allow you progress more quickly and with more accuracy.
We’ve compiled a handy checklist that you can use to determine whether or not you’ve received good advice:
- Is the adviser in a hurry?
- Are they asking you to come to a quick conclusion?
- Does the adviser contradict themselves over the course of the consultation?
- Can the adviser answer your questions comprehensively and to your satisfaction? Remember a technical answer doesn’t mean it’s a good answer. If it doesn’t mean anything to you, ask more questions until you understand.
- Does the adviser understand the advice they’re giving you? Are they able to articulate it well or does it sound like they’re reading it from a piece of paper?
- Are they putting words in your mouth or seeking to influence your decision?
- Not sure? Get a second opinion!
Don’t just take for granted that what an adviser tells you is bonafide and true. If you’re not sure about anything you’ve been told, or if it doesn’t feel right, get a second opinion. There is nothing wrong with getting a second opinion, because if you do, you’ll get a better understanding as to whether what you were originally informed was correct.
Please don’t ever be scared to get a second opinion.
At IVAorg, we are authorised and regulated by the FCA to provide debt advice (FCA licence number 684439). We are always available to offer free consultations with no obligation and no pressure.
Call our helpline or request a call back using the form on our website.