World famous biologist E O Wilson in 1998 famously said “We are drowning in information, while starving for wisdom.” There has arguably never been a better time in our history with greater access to information. Searching the internet for advice on financial planning can throw up a number of questions rather than answers. For example, do I have enough money to retire? Should I consolidate all my pensions? And how will rising interest rates and inflation affect me? These are all personal questions that can be difficult for Google to answer and quite often the right answer will start with ‘it depends.’ Yet there will be an unlimited amount of information on these topics. In my opinion too much information when researching a complex topic can lead to inaction. Part of the role of a financial adviser is to understand complex financial matters, simplify them and present comprehensible solutions, which should in turn increase the probability of action being taken.
Priority
Personal situations can be complex, from budgeting for a first home, right up to the best way of leaving money for the children. There will always be multiple areas that need to be considered. The difficulty most will face when reaching milestones in life is that they have no experience in the area. Most people only retire once, and they want to get it 100% right. An important role for a financial adviser is to prioritise clients wishes and objectives. There is a balance between what you want and the lifestyle that you can afford to live.
What Service is Offered?
Are the adviser firm able to choose from the whole of market when recommending a product, or are they tied to a particular provider? A restricted adviser will only be able to recommend certain products from certain providers. Whereas independent advisers can choose from the whole of the market and so can make a recommendation that is most suitable for you from a wider range of products. It is important to know whether the financial planner is independent or restricted.
Investment service
If you are seeking an ongoing relationship with an adviser rather than just one-off advice, you should be aware of how they choose investments and the level of permissions they have. Firstly, you may want to ‘self-select’ and manage your own investments. If this is something you have the knowledge and experience to undertake, it is worth asking the question to see if this is possible early on. You may wish to have a little bit of control, in which case an advisory service may be suitable, which means your adviser would need to ask your permission to make any changes to any existing agreed investment. The last option is to have discretionary investment advice, which means your adviser can make investment decisions on your behalf without asking your permission first. This can lead to greater autonomy and flexibility to take advantage of investment opportunities.
Cost
The Financial Conduct Authorities report: Evaluation of the impact of the Retail Distribution Review and the Financial Advice Market Review, December 2020, based on responses from over 311 different companies across the country, stated that advisers charge an average of 2.4% of the amount invested for initial advice and 0.8% a year for ongoing advice. Costs for different adviser firms can be difficult to compare fairly as services offered are not always the same. To gauge good value for money, you need to be able to compare cost with the service you want, and it is important to remember that the best outcome for you is not necessarily going out to find the cheapest option.
When it comes to choosing an adviser there are several areas to consider. The best decision is usually made from an informed place and deciding what you want to achieve will make the decision easier. It can be far more straightforward to meet your objectives with a financial adviser that takes the time to understand what you want and is able to offer a recommendation based on the information provided and carefully constructed research. If you want to understand the service that Wingate Financial Planning offer, please get in touch to speak to a dedicated adviser.
