How valuable is your adviser?
Comparison websites let you see the cost of products (like car insurance) without using a financial adviser.
These sites are great tools if you know what you’re looking for and you want low-cost home insurance or to review your gas and electricity bills. With this kind of information available from a quick internet search, might leave some asking ‘why pay for financial advice at all?’
The one question you need to ask
The truth is that the two services are completely different. One is transactional – a moment in time – the other is about long term peace of mind and confidence in the suitability of your financial decisions. Whether you seek out financial advice or not, we would encourage you to ask ‘What do I actually need?’ It’s a big question, and the answer will be unique to you. Answering this question fully will involve many considerations; financial products you’re currently paying for, and if they’re right for you, your aspirations, and your financial goals.
”Think of it this way, let’s say you’re looking for a new car. A comparison website will certainly show you how much horsepower you can buy within your budget. But what if you need a 7 seater for the school run? An adviser brings crucial questions into focus and helps clients to avoid costly mistakes.”
An adviser’s true value
The truly valuable part of an adviser’s input is not just the products they recommend, or simply choosing the cheapest plan. An adviser uses their extensive experience and professional knowledge to help you identify what you need and plot a path towards achieving that.
For example, if you’re looking to invest – is a cash ISA the most suitable option? What about a stocks and shares ISA, Lifetime ISA? Are you preparing for retirement and what are your pension contributions? Do you need to reduce any debt? Once these questions are answered, an adviser can map out the possible paths ahead. Many people don’t know about the range of options available to them, therefore their adviser may be able to suggest (combinations of) products they’ve never heard of, with plans that allow for major life changes – like changing job or buying a house. What is certain is that choosing to use a financial adviser will ensure that you don’t have to make important financial decisions alone.
Transparent financial advice
For those who may be hesitant to seek out financial advice, there’s good news. In December 2012 the Financial Conduct Authority (FCA) launched the ‘Retail Distribution Review’ (RDR) which set out to raise professional standards in the industry, and improve clarity about the different advice services and their charges. Now everyone working with financial advisers will benefit from improved transparency around adviser’s services and what they cost.
You should not view any of the information contained within this article as advice.