Financial toll of bad advice

Almost one in five Brits have received bad financial advice from their friends and family and have suffered financially and emotionally as a result, according to new research from the specialist mortgage provider.

As part of its Not So Average Joe campaign, Birmingham Midshires mortgages polled more than 2,000 Brits on the consequences of taking advice from friends and family.

Bad financial advice

The study found that 16 per cent of those polled had been given bad advice by their nearest and dearest. This figure rose to almost a quarter (23%) amongst 45 to 54 year olds and fell to 10 per cent for 18 to 24 year olds.

More than a third (37%) were given bad advice relating to investments. A significant minority (19%) also suffered at the hands of mortgage advice from friends and family. Bad advice was least likely to be given about pensions (10%).

Percentage of Brits who have received bad financial advice from friends or family:

Investments - 37 per cent
Mortgages - 19 per cent
Insurance - 13 per cent
Savings - 12 per cent

Tim Hague, managing director of Birmingham Midshires mortgages, commented on the findings: “While it may appear more accessible and less time-consuming to act on the recommendations of friends and family when it comes to financial advice, rather than to seek qualified and professional advice, our study demonstrates that it really does pay to visit an expert. Almost one in five people questioned in our study have suffered in some way as a result of a bad piece of advice.”

Negative impact

While the vast majority (81%) of those who have been given bad advice from friends and family suffered financially, the negative impact of bad advice is not restricted to the purse strings. Almost one in five (17%) wasted a lot of time in the process. Just over one in ten (12%) admitted that their relationship with the person who gave the advice had deteriorated. A minority of those questioned (4%) lost an asset such as a house, a car or another belonging of value.

Tim Hague continued: “By visiting a qualified expert in financial products, such as an independent financial adviser, you will get impartial financial advice which will help you work your way through the maze of financial products available. As a result, visiting a qualified advisor can save a lot of time in the long-run; and you can rest assured that you are making a financial decision which will be tailored to your own needs.”

Financial Advice – the facts

IFAs are regulated by the Financial Services Authority and must act in the best interests of their clients.

IFAs must show a menu of prices before selling anything. Some may charge an hourly fee, while others will give advice free to clients and take commission from the bank or building society on the products they sell.

All qualified IFAs in Britain are required to hold a Certificate in Financial Planning as a basic qualification. Advisors can then gain specialist qualifications to become an expert in one area, such as mortgages.

There are approximately 9,000 IFAs in Britain.

Some advisers have 'chartered financial planner' status, making them equivalent in professional standards to accountants and surveyors.

To find a local IFA, visit unbiased.co.uk.