Most people are likely to need financial advice at least once in their lives. A large number will benefit from seeking advice on several occasions, and a few will do so regularly. So how can you work out what your own advice needs maybe? And how do you know when it’s time to find an adviser?
If you’re facing a big decision on which a lot of money depends, advice can be invaluable. Things like setting up a pension, or planning for retirement may be rare. So you will probably have very little experience on which to base these crucial choices. And though you may seek guidance from friends and family, or online, neither of those can give you as much confidence as unbiased advice from an experienced professional.
What services do financial advisers offer?
Financial advisers carry out a ‘fact find’ where they ask you detailed questions about your circumstances, your goals and how much risk you are prepared to take. Then may they recommend financial products that are suitable and affordable for you.
Types of financial advisers
Financial advisers offer services ranging from general financial planning and investment advice to more specialist advice, such as a particular product such as a pension.
In the case of investment products, some advisers are ‘independent’ meaning they offer advice on the full range of products. While others offer a ‘restricted’ service meaning that the range of products they will look at is limited.
How can a financial adviser help me?
A financial adviser will do much more than simply tell you where to put your money. The whole point of advice is to make your money work for you and help you achieve your goals in life. So a good adviser will look at your circumstances as a whole. From your current situation to your long-term future, to help you decide upon the best action to take.
What are the benefits of getting advice?
You should get a product that is suitable for your particular circumstances.
You should get have access to a wider range of choices than you’d be able to assess on your own.
You should get more protection if things go wrong if you buy based on advice.
The difference between advice and ‘non-advised sales
Many banks and specialist brokers will talk you through your different options and leave it up to you to decide which product to take.
In this case, you’re buying based on ‘information. This means they will generally not be assessing whether a specific product is suitable for your specific needs. This means you will have fewer rights to claim compensation if the product turns out to be unsuitable.
By contrast, if you end up with an unsuitable product after getting advice and a recommendation you could have a case for ‘mis-spelling. Though this doesn’t protect you against making losses if the market goes up or down.
What do you pay for financial advice?
The rules on fees for financial advice changed from 31 December 2012.
If you are looking for general financial planning advice or for advice on buying particular investments you will likely pay a fee.
Advisers must be clear upfront about what their fees are and agree with you in advance on how you will pay them.
However, some mortgage brokers might still charge upfront fees for advice, while others receive a flat rate introducer’s fee from the product provider. Receiving mortgage advice directly through your lender is usually free.
Is it cheaper to buy without advice?
You won’t have to pay an advice charge if you invest without receiving advice. But you may be more likely to buy a product that is unsuitable for you if you invest without taking advice first.
The advice can help you buy a better product than the one you choose yourself. An adviser will also have the expertise and knowledge to find better options, as some products are only available through an adviser.
When should I contact a financial adviser?
There are many occasions in life where advice can make a big difference. Most people who contact an adviser do so when facing one or more of these decisions.
- Starting a pension
- Saving for / buying a home
- Investing
- Marriage / starting a family
- Making a significant career change
- Starting or running a business
- Planning ahead for retirement
- Taking an income in retirement
- Planning life after retirement
Other reasons for seeking financial advice may include moving abroad, getting divorced, arranging for yourself or a relative to go into long-term care, or any situation in which you may need to take out a financial product, such as a mortgage, insurance, or a pension arrangement.
