You could do things yourself when it comes to managing your wealth and finances. You could also try fixing your car on your own, or fixing an electric problem in your house.
Some people will be brilliant at doing these sorts of things on their own. For others, it’s a really bad idea which, in all likelihood, will lead to a bigger, more expensive problem when it goes even more wrong!
With financial matters, particularly as you get on in years you tend to get busier and, hopefully, wealthier. Managing your finances and financial goals get more complex, and it can really pay to get the help of an experienced financial planner to help you.
A financial adviser (or planner) will be able to identify areas to save on taxes or increase your wealth, which you might have missed. They can also act as a helpful accountability partner for your finances, either making decisions on your behalf or reminding you to make important decisions yourself at the correct time.
Of course, we’re not trying to argue that you simply forget about money and hand over all responsibility to a financial adviser. It works best as a partnership, where you can grasp the essentials and draw from the knowledge and resources of a seasoned professional.
With all that said, there are lots of financial advice and planning firms out there. Which one should you choose? What sorts of qualifications, skills and experienced should you be looking for to ensure that you partner with someone who is a good fit for you?
#1 Certifications
Lots of people call themselves “financial consultants” or “experts” and might claim to be able to help you, but that does not mean they necessarily can.
In the UK, the Financial Conduct Authority (FCA) sets out minimum qualifications which an individual needs before they can offer financial advice. At the very least, they should hold the QCF level 4 (about the same as the first year of an undergraduate degree).
However, if they hold additional qualifications such as Certified Financial Planner or Chartered Financial Planner, then that’s even better.
#2 Registration
In addition to the minimum certifications, you should make sure that the financial advisers you are considering are both registered on Companies House, and also listed on the Financial Services Register – to ensure they are properly authorised.
#4 Types of advice
Some financial advisers will be able to look at the entire range of available financial products on the market and help you decide which options are the best for you. These types of advisers are typically called “whole-of-market” or “independent” financial advisers.
Others, however, will limit the products they offer to you because they are “restricted.” They might do this because they are tied to the product in some way, which binds their hands. This option can work for some people, but you do run the risk of not getting access to better, more cost-effective options available on the wider market.
If you are unsure about whether a financial adviser is “whole-of-market” or “restricted”, then it is best to ask them directly which category they fall into.
#5 Check the fee structure
It used to be the case that many financial advisers in the UK would take a commission from whatever financial product they sold to a client.
This often created a conflict of interest as financial advisers were often incentivised to offer products to clients which were not necessarily best for them, but which resulted in a higher profit for the financial adviser.
Thankfully, since 2013 UK financial advisers have been banned from charging a commission on pensions, investments or any retirement-related financial products (e.g. annuities). Rather, a flat fee must be charged for taking the advice.
Be wary, however, that financial advisers are not prohibited from taking a commission on other financial products such as mortgages, equity release or life insurance.
So, make sure you directly ask the financial advisers you are considering about their fee structure and consider whether this works for you. Some will charge an hourly rate whilst others might charge a set fee for a defined piece of work.
Ongoing work might involve a regular “management fee”, perhaps once a month or once a year.
Remember, cheap is not always cheerful. Don’t just look at the price tag when weighing up the different offers of financial advisers. Consider their experience, qualifications and particular areas of expertise as well. Sometimes, it can be worth paying a bit more for access to that extra knowledge or peace of mind.
#6 Take advantage of the free meeting
Almost all financial advisers will offer a free, no-commitment initial meeting so you have a chance to get to know them – and for them to get to know you, to see if there could be a good mutual fit. Take advantage of this.
There is a good chance that you may be working with your financial adviser for a long time, so you need to feel confident in their abilities and comfortable in their company.
Certainly, arranging to meet up with three or more different advisers like this is going to take up some of your time. However, bear in mind what the end result could be. Choosing the right financial adviser and defining a clear, sensible financial plan together could result in thousands of extra pounds saved or generated down the line.
You do need to invest some time and energy when weighing up the options, but this should more than pay for itself in the long run. It can be a frightening thought, arranging to meet a stranger and talk about your finances (a sensitive topic). However, you do not need to bare everything at the beginning, and you should be able to quickly tell whether this particular adviser in up to the job once you meet them.
If you are interested in arranging a free financial consultation with one of our financial advisers here at Cedar House, then we would be delighted to meet you. Get in touch via the phone number below or by filling out our confidential contact form, here on our website. We look forward to speaking together!