On the financial couch
One of the biggest benefits of seeing an adviser is also one of the most overlooked. When you’re trying to sort out your money, it helps just to have someone to talk to – someone who knows what they’re talking about. Welcome to the world of the financial adviser as counsellor.
Are you fine with finance? Or does it make you a little bit phobic? (Be honest). A lot of us are afraid that we don’t understand our own money, and even more afraid of admitting it. This is when it can help to think of your financial adviser as a kind of counsellor.
It’s good to talk
The first thing most of us want to know is: what, out of all the available information, is relevant and helpful to me? Before you can even begin comparing ISAs, pensions and so on, you first need to grasp the many different options and understand what they could mean for you in practice.
An adviser can do far more than just help you compare different products. Where they come into their own is in helping you build those financial decisions into your life. Even if you aren’t the sort to make long-term plans, a talk with an adviser can help you sort out your priorities. And since most of life’s priorities involve money to some extent, a financial plan will mean you are better equipped to pursue them.
Got a problem? Like a counsellor, a financial adviser won’t necessarily help you solve it. Or rather, you may go in seeking the answer to a particular problem, only to discover that the real issues lie elsewhere. It’s common for people to become blinkered about their own lives, and to get wound up about a particular issue. By talking everything through with your adviser, you can see the bigger picture and explore possibilities you never considered before.
Craig on the financial couch
Consider Craig. He’s 52, runs a business and is hoping to take early retirement. However, he is worried he might run out of money, so is thinking the family may have to move to a smaller house. His wife Lisa persuades him to see a financial adviser about it.
The adviser finds Craig’s finances in good shape: he has a healthy income, and both he and Lisa have decent pensions and some savings in ISAs. But it emerges in their discussion that Craig is concerned about his children. The eldest is already in higher education, but the others are 16, 14 and 8, and he hopes for them all to attend university in time. He knows it will be expensive to support them, which is why he feels he will need more cash in reserve.
Now the financial adviser knows the root cause of Craig’s anxiety, he can address it directly. Craig wants to help his children through higher education – a specific goal. The adviser makes a suggestion: one of the biggest costs for a student is accommodation. Craig could potentially buy a flat (with an interest-only mortgage) for his elder daughter to live in when she goes to university. His daughter can rent out the spare rooms, and if her sister and brother end up going to the same university they can use the flat too. When the flat is no longer needed it can either be sold or retained as a source of regular income. Either way, Craig gets to reclaim the money he used to support his children’s education, and may even end up profiting from the arrangement.
There is nothing especially fancy going on here – Craig might well have thought of the same plan himself. The difference is, the adviser can look at Craig’s overall financial position and give a highly informed assessment of its feasibility, with likely costs, rewards and risks mapped out at each stage. The adviser can also help Craig to put this plan into effect – for instance, Craig could significantly boost his savings by transferring them into his pension now, then withdraw a tax-free lump sum in three years’ time to fund the deposit on the flat – just in time for his daughter’s return from her gap year.
Craig leaves with a definite plan in mind, his uncertainties ironed out and his anxieties laid to rest – and Lisa’s glad they get to stay in the family home.
Do you have a money-related dilemma on your mind? You could raise the issue at your free financial health check from an independent regulated adviser – and receive £50 off the cost of formal advice if you proceed.
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