It can be daunting, can’t it? Deciding whether to hire a financial adviser is a big decision. You are giving somebody access to one of the most sensitive parts of your life.
The right adviser, however, can help to make the best financial choices for you and your family. In turn, this could save you money, time, and sleepless nights.
So, what do you need to know before hiring a financial adviser?
We have set out seven things you need to consider before deciding whether you need to have an ongoing relationship with a financial adviser, and which adviser to choose for you and your family.
The services offered by different financial advisers can greatly vary. It is therefore very important that you choose somebody that is qualified and experienced in the specific area(s) you need advice in.
For example, some advisers may only be qualified to give you advice on protection planning. In this instance, if you are seeking advice about transferring and consolidating your pensions, or perhaps how to efficiently draw from your pension, this simply would not be possible. Instead, you would need to engage an adviser who is more experienced in this field and qualified to deliver advice on this topic.
It is also important that you consider how you wish for advice to be delivered. The effects of the Covid-19 pandemic have seen the use of video-call technology dramatically increase, and you may be comfortable receiving advice in this way. However, given the sensitive nature of financial planning, you may prefer to deal with a firm that is based locally, enabling face-to-face meetings to take place with comparative ease.
Not everybody requires comprehensive, in-depth and ongoing financial advice. It may be that initially you only require assistance in helping you to manage short-term debt, or perhaps you need a helping hand with budgeting your household income. With so many free resources available, you may not need to partner with a dedicated financial adviser. See below where we have listed our three favourite free resources to help with such financial matters.
On the other hand, individuals who wish to plan for significant life events such as retirement or inheritance and tax planning could greatly benefit from seeking professional advice. A financial adviser will not only offer you invaluable knowledge and expertise regarding your options, but they will likely save you a lot of time and money as well. And who doesn’t want that!?
Ideally, you want the same financial adviser for life. Your financial adviser should be someone you and your family have an ongoing and close relationship with, often including future generations too. It is therefore important that you trust your adviser implicitly.
Figuring out that you would be better off with a financial adviser is often the easy part, but how do you know who is going to be best suited to you and your circumstances? Navigating the sea of financial advisory firms, the different services offered, and varying fee models can be overwhelming. That’s why we have put together this document for you!
Your Adviser should not only ask you about your current circumstances and future goals, it is also extremely important that they truly understand:
This will form the basis of a thorough and detailed plan, designed specifically for you. Once created, this ongoing plan will help you to manage the financial side of your life and align it firmly with your goals. As we know, life changes and your plan should be something that changes with you. As the saying goes: ‘fail to plan, plan to fail’.
Choose an adviser that you have a strong rapport with - someone you will feel wholly comfortable picking up the phone to, somebody who takes the time to explain things clearly, and someone who keeps you well informed.
So, where do you start? Word of mouth recommendations are always great, and many advisers have client testimonials on their website - these are often a good place to start getting a feel for the advisers and the services they offer. Most financial planning firms offer initial consultation meetings at their own expense - use this facility! Don’t rush your decision; have an initial chat with a few different advisers to allow you to find your perfect fit.
You could start with a free initial consultation with Chameleon Financial Planning and see how we fit you?
You may have seen these words when searching for/about financial advisers, but what do they actually mean? Financial advisers are either classed as being ‘independent’ or ‘restricted’.
In a nutshell, independent financial advisers have access to and can select investment products from the whole of the market. Restricted advisers, on the other hand, can only recommend a narrower band of products and from a limited number of providers. So which one do you pick?
Working with an Independent Financial Adviser means that you, like they, have access to the full market of investment products and funds. In short, this means your adviser can advise on products from any provider from the whole of the market. This means you can be confident that you are aligned with the best products and funds, tailored specifically to you.
This is quite possibly the question you really want the answer to. Well, there is good news!
It’s probably not as much as you think and initial advice may not cost you anything at all.
Let’s explore this.
Before you agree to take somebody on as your financial adviser, both you and the adviser must agree on the level of costs and services offered and any charges must be agreed in advance. This means that there should be no nasty surprises or hidden costs along the way.
There are three main types of fee structure:
You may find that some advisers offer the option of all three.
In addition, when setting up protection plans such as Life Insurance or Income Protection, your adviser is often paid commission by the provider they set the life cover up with. The commission they receive should be outlined to you, and you may also have the option of paying this directly to the adviser yourself, which in turn will reduce the premium you pay.
You also have options when it comes to how to pay your fees. You may wish to pay these directly or by way of deduction from each financial product. Like the amount being charged, your adviser should explain every option of fee payment to you in granular detail before you proceed.
In short, advisers should always present costs and charges clearly, without ambiguity, and they should do so before you accept any recommendations. Do not proceed with a financial adviser if they have not clearly laid out exactly how much they will be charging for their services.
Still need some peace of mind? Every financial adviser must be authorised by the Financial Conduct Authority (FCA), in order to provide you with legitimate financial advice. In order to gain authorisation, there are various benchmark qualifications an adviser must achieve – you can even check if an adviser is authorised by the FCA by accessing the FCA register: http://register.fca.org.uk/s/
Whilst some people may think they would prefer a Financial Adviser who has ‘been around the block’, experience should not come at the expense of access to the latest financial technology innovations and developments. You may even find young advisers raising the benchmark for professionalism, qualifications, and technology. Plus, you wouldn’t necessarily want your adviser retiring before you now, would you?
It’s vital you are confident in your Adviser’s knowledge and the services they offer. If you are not, get a second opinion. As mentioned previously word of mouth recommendations are great, or see if you can find any testimonials on their website.
It is imperative that your adviser is able to paint a full and detailed picture of your current situation, and where you want to be in the future – this means you also need to know exactly what you want for your future.
Since you have made it this far through our guide, we’ll reward you with what is arguably our best piece of advice. Whether you decide to use a financial adviser or not, one of the most constructive things you can do is to make the most of the free initial consultation offered by so many firms. To get the very most of these sessions we recommend you do the following:
Money is a complicated subject, and there is a lot to consider when trying to protect and grow your wealth.
You need to ask yourself why you are looking for a financial adviser in the first place. Ensure you shop around for the right adviser and be sure to make the most of all of the free resources available to you. Don’t be afraid to ask plenty of questions, especially regarding fees.
Engaging a good financial adviser can help to steer you in the right direction and you will likely find that, in the long run, the money you invest in expert advice will be paid back many times over. So make sure you take the time to find the right adviser for you.
We hope this document has been useful to you and has answered any preliminary questions you may have had. If you have any further questions or topics you’d like to discuss, you can call us on 0800 368 9687 or book a meeting via our website. We would be happy to talk through any of your questions or concerns.