Ten worst places to put your money. 4. Financial advisers

There are probably more than 100,000 people in Britain who claim to be financial advisers. Most are just salespeople employed by banks and other financial companies. there job is to sell you whatever product their bosses have decided gives them the most profit. As their earnings are mostly made up of commission, they will do or say anything to get hold of your money.

In Britain there are about 28,000 registered IFAs (Independent Financial Advisers). These should supposedly give you unbiased financial advice. But there are four main dangers. 1. Commission bias – many advisers will recommend the products that pay them most commission, not those which are best for you. For example, you can usually save about 5% by buying unit trusts through a funds supermarket. Most financial advisers will not mention this as then they would not get their commission. Similarly, they will tend not to mention cheap ‘index-tracker’ unit trusts as again these do not pay commission. 2. The organ grinder takes your money, the monkey manages it – in many IFA firms, the senior people can spend much of their time  ,eeting new potential clients to convince them to use the IFA’s services. This means you will often be persuaded to part with your cash by a senior figure (the organ grinder) but that it will actually be managed by a much more junior employee (the monkey). 3. Switch and Get Rich – a scam many advisers are running at the moment is to convince their clients to move their savings from older, poor-performing pensions into newer ones and SIPPs. If you’ve 15 to 20 years to go before retiring a financial adviser can pocket about a quarter of your savings in commission by convincing you to switch. You switch, they get rich. 4. Most are not fully qualified – of the 28,000 registered IFAs. only about 1,500 are actually fully qualified to give financial advice.

From next year, IFAs are supposed to give you full details of their fees and no longer work on a commission basis. But as we have so often seen in the past, the finance industry has always found ways of getting past any new regulations. I have no doubt that IFAs will. I think I already know how they are going to do it.