Why Do I Need a Financial Advisor?
18 Mar 2016 | COMMENTS: 0 | Author: Ryan Smith | General
The internet has given us access to a wealth of information directly at our fingertips; if there’s a question you want answering, or a gap in your knowledge, chances are you’ll find what you’re looking for. So surely if we need advice on investments, wealth management or retirement planning, we can just load up our laptops and start learning?
But it’s not as simple as that…
Choosing simple financial products, such as an ISA or a credit card, probably won’t need the input of a financial advisor. But the risks associated with bigger financial transactions often means the expert knowledge held by an advisor is worth paying for.
Why it’s Worth Seeking Professional Advice
Seeking professional financial advice may seem daunting. But managing your own money can take a lot of time and even put you at major financial risk.
Seeking advice from a professional and qualified advisor takes the job out of your hands and you have a greater chance of generating a return on investment. You’re also protected if you’re misadvised or something goes drastically wrong.
When you take up the services of a financial advisor you’re getting their experience and expertise. They’ll have experience working with a multitude of clients, as well as holding required qualifications that allow them to advise you.
Your advisor’s fee will reflect the experience, qualifications and knowledge they’ve developed through their time working in the industry.
Return on Investment
It’s good to think of financial advice not as a cost, but as an investment; both you and your advisor will want to ensure a return is generated.
As a general rule, financial management on assets worth £30,000 or more delivers the best value. An FA understands the financial markets and can advise you accordingly. They’ll look at your assets and work with you to set financial goals. If these means heading down the investment route, they’ll find out how open or adverse you are to riskier opportunities, generating what’s known as a ‘Risk Profile’ – allowing you to invest your money in a way you’re comfortable with.
While advisor fees vary, average charges are explained further in our recent blog, ‘How Much do FAs Charge?’.
If you take formal advice from an FA you’re protected by the Financial Ombudsman and the Financial Conduct Authority (FCA).
All financial advisors are regulated by the (FCA), a regulatory body for the financial industry, to ensure consumers can trust the industry, and firms will only provide consumers with appropriate products and services. You can check if an advisor you’re in contact with is registered by checking the FCA’s public register.
As a consumer, it’s rare an advisor would intentionally go out of their way to misadvise you, however if you feel you have been, you can submit a formal complaint to the Financial Ombudsman. The Ombudsman’s service is free and undertakes an impartial review of the situation to check whether rules were broken, or you were misadvised.
If you don’t take formal advice (taking free guidance from Pension Wise, for example), the responsibility lies with you if something goes wrong.
Using an advisor’s services makes managing your money easier. Effectively managing investments is a big time commitment, as is developing the knowledge required for best results and keeping up with any major developments and hoping nothing goes wrong.
FAs have an understanding of the financial markets, and are paid to spend their time managing your assets. They keep up with the latest trends and key developments to generate the best returns wherever possible.
If you think you could benefit from the services of an FA, our simple form will directly connect you to an FCA-regulated advisor.
How an Advisor Can Help
It’s important to know what services an advisor provides, before deciding if advice is right for you. The type of advice you need will depend on your personal circumstances and assets, and the financial goals you want to achieve.
- Investing – Investing in stocks and shares is a great way to generate additional income. The risk of loss can be high, and while the financially-savvy may choose to start their investment journey without an advisor, consulting an investment specialist with experience and knowledge can yield the best results.
- Retirement Planning – Planning which income route to take during retirement is a complicated process, due to the recent changes to pension rules. Choosing between flexible drawdown, an annuity or taking a lump sum can be a huge decision, with major implications on your future. A retirement planning expert can help you make the right choice for the future.
- Starting a Business – A financial advisor can help you avoid the numerous financial pitfalls when starting a business. They can work alongside other professional service individuals such as a solicitor and an accountant.
- Life Insurance – Life insurance is an essential product for those with dependents, providing peace of mind should you fall seriously ill, be incapacitated or die. Taking out a policy can be complicated, and can result in lack of cover if incorrect information is provided through any misunderstanding.
Whether you choose to get a financial advisor to help you with your financial management depends entirely on your personal circumstances. While you can learn a lot online, and even start basic investments, you’re going to be spending a lot of time and potentially risking a lot of money if proceeding without the help of an FA.
Financial advisors work in your best interest. With regulation via the FCA, you can be sure any information you’re given will be good advice with the intention of generating a healthy return on your investment.
Many advisors will specialise in different areas of expertise; whatever you need assistance with, Local Financial Advice can connect you directly with an advisor who can meet your specific needs.