Using a financial adviser – why it’s worth it

This article summarises the key benefits you can expect from working with a financial adviser. We also outline some of the reasons you can be confident in the services you’ll receive and finally, the protection that’s available to you in the unlikely event you do experience any problems.

Helping you get what you want out of life

Financial advice is often viewed as providing solutions to problems, or meeting specific needs. This is part of what it does, but it’s also much more. 

A financial adviser offering a financial planning service looks beyond short term problems and needs and looks at your situation more holistically. They’ll find out what you really want from life and about your hopes and ambitions for yourself and your family. 

It’s not just about organising your finances, but about identifying where you are, where you want to go and building a financial roadmap to help you get there. Ultimately, it’s about helping you get what you want out of life.

Taking care of you and your family

Financial advice is most commonly talked about in the context of investments, but the reality is that your needs go a long way beyond that. 

Good financial advisers won’t simply talk to you about the money you have to invest or the products you could invest in. Instead your wider circumstances and needs will come into play, to make sure that every step you take fits in with the overall plan to get what you want out of life. 

That means your financial adviser will take tax into consideration, so that you invest tax-effectively, don’t miss opportunities to save money and don’t risk unnecessary tax charges. Your family needs are part of it too, including inheritance tax and your family’s financial security, along with insurance, savings and later life issues such as long-term care and wills.

Saving you from yourself

Poor decisions are perhaps the biggest threat to successful long-term investing and we’ve already seen how human psychology means our decisions risk being driven by emotion rather than reason. Working with a third-party professional can make a big difference here.

A financial adviser doesn’t have the same emotional attachment to your investments. Their responsibility is to you, which means helping provide a clear vision of the future and a view of the bigger picture. In other words, focusing on your longer-term goals. 

A good financial adviser will thoroughly understand your needs and objectives and how to meet them. There’s a good chance they’ve been there before, know where the pitfalls are and recognise when emotions are getting in the way of good decision-making.

Your adviser is well qualified to help

Under rules set by industry regulator, the Financial Conduct Authority (FCA), all financial advisers must be qualified to at least ‘Level 4’. That’s broadly equivalent to the first year of a degree and covers topics including personal tax, pensions and retirement planning and investment principles and risk. There are also Masters and PhD equivalents above that, and specific qualifications for areas such as mortgages, pension transfers and equity release.

Tip. If you’re meeting a financial adviser for the first time it’s always worth asking what qualifications they hold and what they mean

You agree the fees you’ll pay upfront

Your financial adviser will agree their fees with you upfront, and the services that will be covered for that. This is good business practice, so that you understand the cost of both the initial and any ongoing advice that your adviser will provide. It is also something that the FCA requires financial advisers to do. The option for fees to be taken out of your investments if you wish to do so may be available, rather than paying them separately. 

You have protection if things go wrong

If you ever feel unhappy with the advice you have been given you should contact your financial adviser in the first instance who may be able to resolve your concerns. If you remain unhappy, , you can usually make a complaint to the Financial Ombudsman Service, at no cost to you. All financial advisers have to hold minimum levels of professional indemnity insurance, to cover complaints. And if your adviser firm is no longer around or unable to meet a claim, you may be able to access compensation from the Financial Services Compensation Scheme. You can find out more about this scheme and how much you could be covered for at www.fscs.org.uk

Tip. If you use an unregulated financial adviser, these protections won’t be available. 

They will often approach you through unsolicited telephone calls or mailshots. You should not take financial advice from anyone without first checking that they are authorised and regulated by the Financial Conduct Authority. You can do this by checking the Financial Services Register. 

And remember, if it sounds too good to be true, then it almost certainly is.