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Taking financial advice can help you prepare for your future as well as understanding what to do now. Learn how to prepare for getting financial advice, what to expect, and how to choose the right adviser for your goals and financial needs.
Introduction
Financial advisers can advise you on lots of money matters, from pensions and investments to life insurance and mortgages. A financial adviser can also look at your long-term goals and help you make financial planning decisions which will help you achieve those goals and are focused on delivering the best outcomes for you and your family.
The difference between financial advice and financial guidance
The main differences are that financial guidance is free and explains the options available and financial advice is personalised to you and you pay for it.
You might have heard of financial guidance and be confused about the difference between financial guidance and financial advice. Financial guidance is free to use and can help you to understand the different options available. A good source of free and impartial financial guidance is Moneyhelper which is independent and backed by the government. They also have a variety of tools and calculators that can help you. If you are over 50 and have at least one defined contribution pension, then you can also book an appointment with Pensionwise and they will be able to explain the pension options available to you.
However, financial guidance is not personalised or regulated.
Guidance is different from financial advice which is based on your specific circumstances as well as your needs and goals. You pay for it and financial advisers are regulated and authorised by the Financial Conduct Authority (FCA).
Why you might need financial advice
There are several reasons why you might need/want to take financial advice.
Personal advice – a financial adviser will find a solution that fits your specific needs and is right for you, rather than just hand you an off-the-shelf, one-size-fits all product. An impartial financial adviser can research the whole market to find the right product for you.
Peace of mind – discussing your finances with a financial adviser should reassure you that all your financial needs and goals have been considered. It’s their job to make sure your investments are on track and that can be very reassuring when markets are turbulent.
Support – a financial adviser can provide life-long support. That could mean adjusting your life insurance if you move house, have children or change jobs or helping to keep your pension on track to give you the retirement you’d like. They can also help you at times that are emotionally challenging, like the loss of a loved one.
What to expect from a financial adviser
A financial adviser will ask you questions about you, your job, family and lifestyle to get a full picture. This will help them understand where you are now but also what’s important to you in the future and what you want to achieve. That will help them plan and provide a personalised solution.
Financial advisers can help with planning how to use your tax allowances, saving into a pension and your retirement, as well as investing or passing on your wealth to your family. Or they might be more specialised and help with organising mortgages and protecting you and your family in case of death or illness.
How to prepare for your first meeting with a financial adviser
Doing a bit of preparation before your first meeting can help you to feel more comfortable.
Prepare a monthly budget
Consider all income and spending. We have some great tips about how to make a budget here. This will help your adviser to work out how much you can afford to commit to your financial plan each month. As you look towards the future, it also helps them to think about how much income you might need when you retire.
Gather details of any existing pension plans and savings you have
Pensions
If you’ve already been saving in a pension plan, gather together details and, if you can, find out their current value. You should have received an annual statement for each of your pensions or you might have access to this information on an app. Your adviser can help if you don’t have details for older pension plans.
Savings or investments
Similarly, bring all the information that you have on any other savings and investments as this means that your adviser can see your overall financial position.
List your goals
Think about what you want to achieve. That could be the type of retirement you want, or if you’ve already retired, making sure you have enough money in retirement. Perhaps it’s saving to help your children with university costs.
Or it could be that you want to buy a new house, in which case you’ll be looking for a mortgage but also protection insurance to cover the mortgage and regular outgoings to make sure your family is covered if anything happens to you.
Thinking about and writing a list of these plans will help your adviser. They’ll be able to judge how much flexibility is needed with each solution in case your life moves on and your goals change with it.
Life stages that might need a financial adviser
There are certain life stages when financial advice can be very important. For example, if you are buying your own home, getting married or divorced, if you’re having or adopting a child if you receive an inheritance or in the run up to retirement. However, it might also be key at other points too. For example, if you are renting property, it’s a good idea to make sure that your rent would be paid if you were ill.
How a financial adviser can help you
Video Transcript
THE VALUE OF ADVICE
You may have thought about taking financial advice, but been unsure about how it might benefit you. Or maybe you’re unsure about what a financial adviser does.
So in this short video, I’ll explain what a financial adviser does and how to find one.
A financial adviser can help you in several ways. They can understand your needs by building up a picture of your overall personal financial circumstances and agreeing with you the areas you should prioritise.
They can discuss potential solutions - considering which products could be right for you.
A financial adviser can highlight pros and cons - they’ll make you aware of how the products differ - because they’re not all the same.
And finally an adviser can make a recommendation. This will be tailored to your needs, making sure you get the right balance between what you can afford and the quality of products you need.
There are two different types of financial adviser - and it’s important to understand the difference between them.
Independent financial advisers, or IFAs, are able to consider all types of products from firms across the whole market when making their recommendations.
Restricted advisers are limited to certain types of products or certain providers they can choose from.
If you’re in the market for a financial adviser, then there’s a number of directories you can use to search for one. But however you find an adviser, it’s important to check they’re listed on the Financial Conduct Authority’s register. You can find this at www.register.fca.org.uk.
A financial adviser will consider your personal circumstances and come up with a plan for now and what that will mean for the future. They’ll talk you through what you might do to achieve your goals and objectives, but they’ll also explain how that could work. For example, if you are discussing pensions and investments then they’ll explain how risk works and what level of risk you are willing to take, how and when you can take money out of pensions or other investments. They’ll also let you know about any important tax changes. Or they might explain about the different ways you can protect yourself and your family.
How much does financial advice cost?
A financial adviser must tell you how much they will charge and whether, for example, they charge an hourly rate or a fixed fee, before you commit to anything. It’s part of the rules that all advisers must follow. The adviser might not be able to tell you exactly what you’ll pay, but they should be able to give you an indication and perhaps even an upper limit. The most common ways that advisers are paid are by fixed fee, an hourly rate or by taking a percentage of your investment. That could be a percentage for the initial advice and then an ongoing amount for advice. But their charging structure must be clearly explained to you.
How to find a financial adviser
Many people find an adviser through recommendations from friends and family. But you can also search through directories and there is more information on some of these that will help you find impartial, regulated advisers here.
Questions to ask your financial adviser – a checklist
- How long have you been providing financial advice?
- Do you have any testimonials from clients that you can share with me?
- Do you often advise people similar to me (earnings/employment type etc.)?
- Do you charge a fee for the initial consultation?
- What happens at my first meeting?
- How do you follow up after the first meeting?
- What are your ongoing fees for advice and what is included
- What form will the meeting take and where?
- What qualifications do you have?
- Can you explain in more detail the tax implications of the actions you are recommending?
- How does risk work?
- What happens if my situation changes?
- How often will you review my position?
- What are the charges and risk levels for the product you’re recommending and how do they compare with other providers?
- How long have you been providing financial advice?
- Do you have any testimonials from clients that you can share with me?
- Do you often advise people similar to me (earnings/employment type etc.)?
- Do you charge a fee for the initial consultation?
- What happens at my first meeting?
- How do you follow up after the first meeting?
- What are your ongoing fees for advice and what is included
- What form will the meeting take and where?
- What qualifications do you have?
- Can you explain in more detail the tax implications of the actions you are recommending?
- How does risk work?
- What happens if my situation changes?
- How often will you review my position?
- What are the charges and risk levels for the product you’re recommending and how do they compare with other providers?
Conclusion
Taking financial advice means that you have someone who is focused on helping you achieve your goals and objectives but also someone who can help with peace of mind.
