The Value of Financial Advice for Your Retirement Savings
The value of financial advice is not a simple question to answer. After all, it depends on the circumstances of each individual situation and whether that particular person actually benefited from it in the end or not.
In this article, we discuss the real value of financial advice & what you can expect to receive from them.
What services can I expect from an independent financial adviser?
Financial advisers provide a diverse array of products & services to help you with your finances during various stages of your life; these include:
- Retirement Planning & Pensions
- Wealth Management
- Savings & Investments
- Tax Planning
- Estate Planning
To help get you the best advice & guidance, they will conduct what’s known as a fact-finding stage, where they will ask detailed questions about your circumstances to assess the level of advice you need and the type of products that would benefit you.
These questions may vary, but typically, they would look like this:
- What are your goals?
- What is your current financial situation?
- How much appetite do you have for risk? (how much investment risk you’re willing and able to take).
After the fact-finding stage, they will format a roadmap or financial plan based on your answers, which covers financial products & a potential investment plan that suits you.
Types of financial advisers
Deciding whether you need independent or restricted financial advice, but what do those terms mean?
Some financial advisers are “independent,” meaning they are not restricted to the products or services available and can search the entire market.
“Restricted advice” means they can only look at a limited number of products or providers, usually sold by the company they work for.
When you speak to a restricted adviser, ask them what type of financial advice they provide. Getting advice can be helpful for many reasons, so you should always check what type of advice or service they can provide.
What are the benefits of getting financial advice?
Financial advice can be beneficial for multiple reasons, for example:
- When you buy an investment product based on financial advice, you’re more likely to end up with a product that suits your needs and is appropriate for your situation.
- Some advisers can offer you more choices than you could find on your own.
- When you have significant and potentially tricky financial decisions to make, such as approaching retirement, advisers can provide expert guidance.
- An adviser can help you by creating a plan to achieve your short-, medium- and long-term goals. They will also motivate you to reach those goals and make necessary changes.
- An adviser can help you invest your money to earn a good return and take advantage of tax breaks.
Is financial advice worth it?
How much is financial advice worth to you?
The International Longevity Centre is an independent research organisation that aims to measure the impact of us all living longer on society.
As it is not a financial institution, the research & data is a fantastic source for understanding financial advice’s statistical benefits on overall health & longevity.
Recently, the ILC came out with “powerful research which shows the genuine return to obtaining expert financial advice”.
The value of independent financial advice, according to ILC
The main question you have at this stage is, is financial advice worth it? Absolutely.
But first, we need to define what “it” financial advice is “worth” (you can read the complete guide about the value of financial advice here).
You want to know if spending money to manage your assets will positively impact your circumstances. But the benefits of an independent financial adviser go beyond this.
Those who received advice from an independent financial advisor were significantly more likely to save more. Often, people assume that financial advisors are about recommending the best investments.
But this is not the case; any financial advisers worth their salt want to encourage positive habits, like saving extra income for your financial future, providing insight into the current global market, or discussing your options when making life-changing purchases.
According to the research, the same individuals who saved more when receiving financial advice ended up significantly wealthier, around £43,000 better off on average.
More than 91% of people say they are satisfied with the financial advice they receive. While having a few extra quid in your pocket might make you happy, the source of satisfaction is the peace of mind that professional advice provides.
The research findings make sense; what people think they want from a financial advisor (investment returns) is helpful, but they value financial peace of mind more.
Do financial advisors help you make money? Yes, and not just for your income; it’s difficult to attribute a number to the peace of mind you gain from being financially sturdy.
Who is financial advice for?
Although the benefits are clear and easily measurable, only 17% of the population receive expert financial advice. One of the reasons is a general mistrust of financial advisors, a view that they cost more than they are worth.
Although we understand that perspective, one of the basic rules of being a dependable financial advisor is that the value given must be more than the cost charged. If not, it simply would not be beneficial to partner together.
One of our core values at Hanson Financial Services is that we only offer our services to clients when we know we can add value (net of fees).
Quantifying the value of financial advice is complex, and some argue that it will always be based on a person’s independent circumstances. But growing research demonstrates that you could be significantly better off if you follow financial advice.
The more money you have, the more likely you will get a financial advisor. We believe that expert financial advice shouldn’t just be available to the wealthy but affordable and accessible to a broader range of people.
The above data shows that financial planning adds tremendous value to your long-term financial health; having a tailored plan can make a world of difference.
You should find a financial adviser that understands you and your financial objectives. It is often a personal relationship, and an adviser can become a financial coach for your more comprehensive finances.
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We’ve provided financial advice since 1998, wanting to broaden people’s knowledge of personal finance and give you the tools to control your wealth. Book your free consultation today if you are planning for retirement or require financial advice.