What you can expect from a Free Financial Health Check
First published 07 March 2016 • Updated 25 July 2019
When you search for an adviser on Unbiased, you may notice that some display special offers: a free financial health check, pension check, investments check or mortgage review. Here you can find out what each could include – and why they can be so useful. Article by Nick Green.
If you’ve never seen a financial adviser, or not for a while, then it may not be clear why you should. Unless you have a specific concern (such as ‘I’m moving house’ or ‘I want to draw my pension’), it may not occur to you to seek advice. Never mind the answers – you don’t even know what questions to ask.
That’s why many financial advisers offer a free initial meeting. This is a chance to discuss your current circumstances informally, so you can find out whether formal advice would be useful to you. If you don’t proceed to advice there’s no charge (but you may have learned some useful things nevertheless).
However, many advisers take the free initial meeting a step further. You can ask them to focus on a particular area of your money such as your mortgage, your pension, investments, or just your finances in general. Every adviser will have their own distinctive approach, but here are some examples to illustrate broadly what you can expect from these check-ups.
Free mortgage review
These days it’s easy to go on a price comparison site to try and find yourself a better mortgage. But that’s not at all the same as a proper mortgage review, says Dave Penny, managing director of Invest Southwest. ‘We will of course scrutinise your existing mortgage deal, but we’ll look at much more than that. We start with a detailed fact-find that examines your current circumstances. Why? Because choosing the right mortgage means finding the one that fits the best with your other financial arrangements. As your biggest commitment money-wise, you simply can’t view it in isolation. So we “measure you up” first before we even look at any mortgages.’
Having done this, an IFA or whole-of-market mortgage adviser can then search the entire marketplace for the best deals, including those not found on the high street or even price comparison sites. As well as interest rates, they compare charges, penalties and other potential pros and cons for a proper all-round comparison. A mortgage review may also turn up unexpected savings. ‘One thing we find is that when people remortgage by themselves, they are often sold term insurance each time,’ Dave explains. ‘I’ve known people to accumulate two, three, even five different insurance policies on the same mortgage without realising it. Some have then managed to save up to £100 a month by getting rid of the unnecessary insurance.’
The result is typically a mortgage far more suited to your circumstances – but occasionally it can deliver much more. Dave cites a particular client who, as a result of her mortgage review, discovered that she could not only clear her mortgage, but also retire – neither of which she had expected. ‘She threw a party for us,’ Dave recalls.
Free pension check
A pension check is helpful no matter what your time of life – whether you’re close to retirement or still in the saving-up stages. However, to get maximum benefit you should try and arrange one at least 10 to 15 years before your intended retirement date. Regular check-ups every few years are also advisable, to ensure your plans remain on track.
As with a mortgage review, an IFA will assess your pension in the context of your finances as a whole. ‘You need to ask yourself, “What is your pension for?”’ says Raj Shah, director of Blue Wealth Capital. ‘Obviously, it’s to provide you with income in retirement. But what do you want to do in retirement? That’s the big question. You can only tell whether your pension will be enough if you ask first, “Enough for what?” So we would need to assess your aspirations and your other finances as well as your pension pots.’
Your IFA will project your likely income from pensions and other assets, and measure these against your retirement goals to see if they are realistic. If there is a mismatch, you may need to adjust one or the other. When considering ways to boost your retirement income, the adviser should assess your attitude to risk. ‘We use a Finametrica scale to assess your risk tolerance out of 100,’ explains Raj. ‘A pension check will give you insights into your attitude to risk, which you may not have been consciously aware of. You may find that you are willing to take on more investment risk than your current pension fund offers, and so take the opportunity for higher growth. Conversely, you may discover that you are exposed to more risk than you’re comfortable with. It’s about tailoring the pension to the person.’
A pension check won’t offer any formal advice about what you should do, but it will make you more aware of both your own needs and of the opportunities that are available. It’s also a great way just to engage with the issue of retirement in good time, rather than putting it off until the last moment.
Free investment healthcheck
If you hold investments, you’ll recognise the dilemma: part of you wants to be patient and let them grow in their own time, while another part wonders if they’re growing as fast as they could. An investments healthcheck can put your mind at rest by assessing your portfolio objectively from an expert perspective.
As with a pension check, this is as much about finding out what you’re like yourself. ‘When you come for an investments healthcheck, we’ll first assess your risk profile,’ explains Darren Cooke of Red Circle Financial Planning. ‘We’ll then look at your existing investments to see if they are suitable from a risk perspective. We’ll also examine whether they are aligned with your life goals, as the two elements are closely related.’
This check-up will also look at any fees or charges your current investments might attract, as you may find you are paying more than you need to. Your adviser will also be able to tell you whether formal advice could enable you to find more suitable investments (this would involve a full fact-find that goes beyond the scope of a free healthcheck).
‘You’ll go away with a clear idea of whether or not advice could deliver value for money,’ says Darren. ‘It’s a very useful first step towards more proactive investment based on a true understanding of what you’re doing.’
Free financial healthcheck
If you’re not sure which aspect of your finances needs more attention, or whether you need advice at all, this type of check-up is the easiest way to find out. Adrian Kidd, a financial planner at Radcliffe & Newlands, explains his straightforward approach.
‘I’d generally offer one or possibly two free consultations, taking about an hour, and these can be as specific or as broad as required. When someone books a financial healthcheck with me, I ask them to bring along all their documents relating to their finances – savings, investments, mortgages, loans, insurance, pensions, the works – so I can build up a complete picture of their affairs. I then go through these in more detail after the consultation, and follow up with an email that gives a summary of their overall financial situation.’
The meeting itself is focused on the individual, talking about plans, lifestyle and long-term goals. This, along with the financial summary, provides a template for any possible future advice.
One thing that may surprise some people about these free financial check-ups: generally, advisers won’t talk to you about products at all. The process of choosing the right products comes later, after the adviser has built up an understanding of you as a person and your financial planning needs. Only then will they recommend products, if asked to do so – but what an IFA will never do is ‘sell’ you a product, because by definition they are not affiliated to any providers and earn no commission from them. Any recommendations they make are thus solely based on your best interests.
Last but not least, a free check-up from an IFA is simply a great way to learn more about financial advice. To find participating advisers, just search below.
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