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Why not getting financial advice can be costly and 7 mistakes to avoid

It can be tough making financial decisions, particularly life-changing ones where the wrong decision could cost you a lot of time and money.

This is where financial advice comes in handy, which is very different from financial guidance.

A financial adviser offers advice by looking at your circumstances and future goals when thinking about what you should do or before recommending a product.

Financial guidance is usually free and identifies your options but does not make recommendations.

If you’re looking for a financial adviser, you should ensure they are regulated by the Financial Conduct Authority (FCA) and are independent, so they can scan the whole market for the best deals.

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When a financial adviser can help

 There are many occasions when a financial adviser can help, including:

  • Saving for or buying a house
  • Investing
  • Starting or reviewing your pension
  • Starting a family
  • Marriage
  • Divorce
  • Starting or running a business
  • Planning for retirement and exploring income options
  • Arranging long-term care
  • Finding the right financial product such as insurance or a pension

So, if you’re thinking of doing any of the above, getting financial advice is a good idea.

A financial adviser can recommend investments, pension schemes and protection products with lower fees that can potentially save you thousands in the long run, as well as help you save more effectively.

Unbiased’s recent Value of Advice report revealed that those who got advice on pension saving at the age of 25 saved an average of £34,300 more than those who took no advice (not including tax relief or compound interest).

While financial advice is invaluable, there are some pitfalls you should avoid.

A woman meeting a financial adviser. (Image: Pexels/RDNE Stock Project)

7 mistakes to avoid when getting financial advice

Here are some of the most common mistakes to watch out for when looking for a financial adviser.

1. Not being prepared

Planning your dream retirement, want to start investing or save for your own home?

It’s vital that you have an idea about what you want your financial adviser to help you with.

Unbiased matches you with an adviser for your individual needs and your first initial meeting is free, so you can make sure they are right for you before making a decision.

For example, if you’re looking into investments and the adviser focuses on assets that don’t align with your risk profile or strategy, it’s worth considering if they are the right fit for you.

It’s also advisable to ask whether your adviser will review your circumstances regularly, as well as any investments, to make sure you’re still on the right track for your goals.

Struggling to prepare for your first meeting? Use our adviser checklist to help you get ready.

2. Not doing your research or getting references

It’s a good idea to have a look at reviews of any financial adviser you’re considering to discover other people’s experiences.

You could also ask your financial adviser for any references from existing clients to see what kind of service they have received.

This should be taken with a grain of salt as the adviser will choose who you can contact.

3. Choosing an adviser based solely on a recommendation from family or friends

While talking to family and friends about money is positive, choosing a financial adviser based solely on their recommendation can be a big mistake.

The adviser may have offered high-quality advice and recommendations on that occasion, but they might not specialise in what you need help with.

Once you meet with an adviser, check whether they can help you with your financial goals, their qualifications, fees and how they’ll work with you.

4. Not choosing an FCA-regulated adviser

An FCA-regulated financial adviser has to follow certain rules when dealing with clients and must have achieved minimum qualifications to become an adviser.

A good financial adviser will be happy to discuss their qualifications and how they can help you.

If you want peace of mind, Unbiased has a network of over 27,000 financial advisers that are all FCA-regulated and will get in touch with you when you use our matching service – or you can use this tool to find an adviser near you.

As none of our advisers accept commissions as payment, there’s no conflict of interest when recommending products.

5. Choosing an adviser that doesn’t match your needs

A financial adviser may specialise in certain areas such as pensions or mortgages and should discuss their expertise and how they’ll work with you in your initial meeting.

It goes without saying, but it’s not advisable to choose an adviser that specialises in mortgages if you’re looking for someone to advise you on your pension or investments.

6. Not understanding the fees

It’s hard to pinpoint the exact amount you’ll need to pay for financial advice as this depends on what help you need, but good advice should cost less than no advice at all.

Your financial adviser may charge a fixed fee (when you set up an annuity for example), a percentage of your assets when dealing with your investment portfolio or an hourly rate for small or quick jobs.

In your initial meeting, you should get written confirmation on what fees to expect and an estimate of how long the work will take.

7. Not asking questions

As you’ll be trusting a financial adviser with your assets and financial future, don’t be afraid to ask any questions that come to mind.

For example, how do the fees work? Are there any tax benefits or will using a pension product result in a tax bill?

If you don’t understand anything, including the benefits or drawbacks, it’s best to get clarity before signing on the dotted line.


Get financial advice
We’ll find a professional perfectly matched to your needs. Getting started is easy, fast and free.


About the author
Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.