You get what you pay for
Updated 25 July 2017
‘I’ll have the cheapest, least professional advice please,’ said no-one, ever. Angela Maher from Acumen gives a straightforward answer to a simple question: why should you see a financial adviser?
If you’ve ever had a minor health problem and turned to Google before seeing your GP, you will know how wildly inaccurate your diagnosis can be. Treating yourself using the internet could have serious consequences, which is why we go instead to a professional (i.e. a doctor) to find out what’s wrong and put it right. We take this care over our physical health, so why not our financial health too?
Financial advice is something people often try to manage without, relying instead on information found online. Which is strange, when you consider that this involves some of the biggest life decisions most of us will ever make.
Why pay for advice?
As you’d expect, professional financial advice comes at a price. But whenever you pay a price you should expect value from it – and value is what you get. The whole idea of financial advice is that it brings you more money later on.
It’s true that if you buy a financial product directly then you won’t have to pay an advice charge. However, by doing this you greatly increase the likelihood that you are choosing an unsuitable or inferior investment – and such false economy can cost you dearly when you are talking about your whole financial future. Furthermore, IFAs often have access to products not available on the open market, and can recommend the right ones for you based on a combination of experience and up-to-date knowledge.
Living your life with an financial plan
Anyway, you’ve got a life to live. Why spend all your time planning your own finances (and making those inevitable mistakes) when a professional can get it right for you first time? Meanwhile you can use that financial plan to achieve the things you want: buying a home, educating your children, working for yourself, planning your retirement… because what a financial plan does is give you true freedom to make key decisions for yourself. A qualified IFA can help you identify your goals, work out your priorities and build a plan based on quality investments to help you achieve them. Your IFA can also support and review your progress to ensure you stay on track, fine-tuning the plan along the way if need be.
Making good investment decisions isn’t easy
History is littered with cautionary tales, from the South Sea Bubble to the dot com boom to Bernie Madoff. Every generation seems to fall for its own ‘get rich quick’ scheme, usually after being sure they never will. With the arrival of pension freedom, dubious schemes and scams are popping up all over the place, and many more people risk being caught out.
An IFA is your surest protection against such risks. They are qualified to analyse investment plans, ask the difficult questions and carry out the detailed due diligence that is needed to weed out the scammers, the conmen and the conflicts of interest.
Even experienced investors can and do lose their objectivity – such as hanging on to investments that have gone wrong, instead of cutting losses and investing elsewhere. It’s always difficult to admit to a mistake, but an IFA can provide the objective view that can prevent mistakes from turning in to major losses.
What kind of investor are you?
Your IFA can also tailor your financial plan to suit the kind of person you are. If you’re a cautious investor, for example, then you’re unlikely to find anything with stellar returns – and if you do, it’s almost certainly too good to be true. Conversely, if you’re an adventurous investor, you still need to match your investments to your goals, or you could make yourself too vulnerable. An experienced IFA doesn’t just know finance – they know people too, and can work out where you sit on the risk-reward scale and so identify the best investments for you.
This is the meaning of true financial independence – having a professional on-hand whose expertise you can completely trust. In addition to becoming financially better off, the insight, professionalism and ongoing working relationship that develops is the reason so many people not only pay for financial advice, but keep going back for more.
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Angela Maher, managing director of Acumen Financial Partnership, considers herself to be a people person and a bit of a champion for women in the advice profession. Having learnt to love finance at her father’s knee, and starting out in advice as a single mother, she has developed a compassionate business that puts the welfare of clients at its heart.