Advice – what is it good for?
First published 12 January 2016 • Updated 13 March 2018
Quite a lot, as it turns out. This week more people are expected to search for financial advice than in any other week of 2016. But it’s not just about boosting the bank balance – many are hoping to achieve benefits that could affect every part of their lives.
It’s the busiest time of year for seeking financial advice, in what may prove to be the busiest year ever. Yet it seems as if large numbers of people are still in the dark about what a financial adviser does, and so are missing out on the potential benefits. In the 2015 Value of Advice report from unbiased.co.uk and MetLife, nearly 60 per cent of people surveyed had never sought financial advice in any area.
The most common reason given (by 40 per cent of these people) was that they felt confident making their own decisions. Yet the same research suggested that this wasn’t really the case. More than a third of the people who had arranged a financial product themselves admitted regretting the decision later on – rising to nearly half of the people in their twenties. Men were far more likely than women to have made a decision they regretted (41 per cent to 27 per cent) – and yet it was the men who had declared themselves most confident (45 per cent compared to 36 per cent of women). It seemed that the real reason people didn’t take advice was that they simply weren’t aware of the benefits at the time.
The clearest example of this comes from retirement planning. The report found that the average amount saved each month by those who have never taken advice was £72; however, people who had taken advice saved £128. Over the course of a working life, this difference snowballs to an average £48,279 (after tax relief and interest).
So is it worth taking advice?
Everyone’s circumstances are different, and it’s true that some people will stand to benefit from advice more than others. Yet there are far more people who could reap the rewards of financial advice – and avoid the hazards of not doing so. Here are just a few of the areas where advice can be invaluable.
Virtually anyone with a pension pot now has important decisions to make from the age of 55 onwards. The choices you make at the start of retirement will affect the rest of it, and mistakes can be severe and irreversible, so this is the most vital life stage at which to seek advice.
The best deals
Financial advice doesn’t just cover the big decisions, but the details too. For instance, you may have already decided you want an annuity in retirement – but finding the best deal for you can be a lot more involved than simply using a comparison website. The differences between the best and worst annuities can amount to thousands of pounds over the course of a typical retirement.
Protect the things that matter
Consulting a financial adviser can work a bit like counselling – it encourages you to confront and think about the issues that you might normally ignore. These issues can turn out to be some of the most important of all. One adviser on unbiased.co.uk recently shared a remarkable story of how his advice on protection cover literally saved a man’s livelihood and the family home – and gave his business a boost into the bargain.
Inheritance tax (IHT) can be reduced or even eliminated with a few simple, perfectly legal measures taken in advance. It’s frustrating then for many families who find themselves still hit by large bills when a loved one dies – bills that sometimes have to be paid before the estate can be distributed, leaving them seriously out of pocket.
Financial advice – the facts is a quick introduction that answers all your
biggest questions: such as ‘What is advice?’ ‘What does an adviser do?’ and ‘Could financial advice benefit me?’
The Cost of advice guide is a summary of the average prices you can expect to pay for a range of common advice scenarios. Actual fees may vary between advisers, but this is a very useful way to get a ballpark figure.
Choose your adviser is your practical tool for actually finding the adviser who is right for you. It covers all the key questions you need to ask, so you can compare different advisers objectively.
Your retirement countdown checklist is your guide to planning your retirement whether it’s 10 years, five years or just a few months away, and includes all the key questions to check with your adviser.