Is Financial Advice Worth It?...
Financial advice means different things to different people. I’m going to give you my take. I wonder how this might compare to how you feel.
Ultimately, you’re the client so, to some extent, it doesn’t really matter what I think because it should be very much about you!
The Financial Planning Part
When I meet a client for the first time, I’m more interested in them and their life than I am about their money. This probably goes against the grain for most financial advisers who tend to be drawn to the money like a moth to a lightbulb.
I’m interested in what you want to do with your life. What do you enjoy doing? What are your fears and hopes for the future? Some deep questions in there but I think it’s important to uncover the answers.
In many cases, people find the process of articulating what’s important to them and what their priorities are very useful and of great value.
It gives you an opportunity to evaluate (with an outsider, but someone you trust) on a regular basis what is truly significant to you.
There’s some technical stuff involved in this part of the work, not least when I produce projections to show you if the things that are important to you can be achieved or not. This could be things like:
Making sure you can pay the bills in retirement.
Knowing you can afford to do the travelling you’ve always wanted to.
Being clear on whether you can afford care fees.
Understanding clearly if you can gift money to loved ones.
Ultimately, what it tends to boil down to is reassuring you that you can live the lifestyle you want for the rest of you life without worrying about running out of money. Important stuff!
In some respects, the financial planning side of my work is more important than the financial stuff (which you expect to be done, rightly so, anyway!).
The Technical Part
This is more likely to be the kind of thing you expect from a financial adviser. Looking after your money. But what kind of things should they be doing for you?
The Right Financial Products
loads of investment products which include (but are certainly not limited to) pensions, ISAs, investment bonds and general investment accounts.
These products have different tax rules and you should expect your adviser to match the right products to your tax status, now and in the future, so you don’t end up paying more tax than you absolutely have to.
Making Sure Your Money’s Invested Properly
Investing means different things to different people. A good adviser should be crystal clear on what you need your money to do for you and set up your investments to meet those needs.
For me, investing should be a process and not speculation so it’s important that a clearly defined way of doing things is laid out for you in easy-to-understand terms.
For a lot of people, ethical investing is a really important issue. This should be reflected in any investment strategy that’s set up for you.
Simplification
Generally, people come to me with a number of different financial arrangements. This can make things complicated for them. Part of what I do is make sure things are as simple and straightforward as possible for them so they don’t have to worry about missing a trick.
Withdrawal Strategy
If you need to take an income from your invested money, where should you take it from? This can have all sorts of tax implications and it’s important that you know what the most tax efficient way of taking that income is.
Using Tax Allowances
HMRC can be stingy but there are certain tax allowances (e.g. income tax allowance and capital gains tax allowance) that can be used to make your arrangements more efficient.
Anything Else?
There are other things a decent financial adviser should bring to the table.
Support When Times Get Tough
Markets go down. That’s inevitable. When this happens, having a good financial adviser to reassure you why you’ve invested in the first place and that this is all part of the process could be really valuable.
I’ve talked many clients off the ledge and, by leaving things as they are during market downturns, they’ve seen their money get back on track and grow. That’s easy with hindsight so support along the way it’s really important.
Give you Confidence
Financial decisions can be difficult to make on your own. And they’re rarely just about you. Either directly or indirectly, they can also affect the ones you love.
Talking things through with the financial advisor can bring you some clarity and confidence in what you’re looking to achieve and knowing that your own thinking is on the right path.
Save Time
If you don’t know too much about this Financial stuff, working with a financial adviser can take a lot of headaches away and save you loads of time and having to research everything yourself.
A Decent List?
As I’ve been writing this, it feels to me as though there is a pretty decent list of benefits to you from employing a financial advisor. Course, you would expect me to say that but I hope you can see it for yourself.
Of course, there are good and bad financial advisers and shopping around is no bad thing to do. The relationships I have with my clients last for years so you want to make sure you’re with the right person!
I hope this has been useful and, as normal, would welcome any thoughts you might have.
Until next time…