There aren’t that many things out there to invest in that can give you a 6,000 per cent return. But professional financial advice might just be such a commodity if a recent report by Unbiased.co.uk is anything to go by. Unbiased.co.uk, which is a website that helps members of the public find financial advisers, estimates a 25-year-old contributing £200 a month by taking professional financial advice could build up a pension pot around £34,300 higher over their working life than if they had set up their plan on their own. Looked at in this context, financial advice, that might have seemed expensive at the time works out as a very good deal indeed.
Britons are going through something of a journey when it comes to understanding the value of financial advice. For years, financial advice seemed to be free – but that was because advisers were taking commission which was ultimately paid for by the customer out of higher charges. Today, commission has been outlawed altogether for providers distributing pension and investment products – which can be seen as a good thing, because nowadays the public can be confident that the recommendations the adviser gives are on the basis of what is the best for the client and not, as has been the case sometimes in the past, on which provider is paying the most commission.
It’s not just 25-year-olds who can save big money by using a financial adviser. Clever use of the tax wrappers the Chancellor has kindly made available – whether the mainstream pension, Isa, investment bond – or more esoteric structures such as venture capital trusts and enterprise investment trusts, can save investors of all ages serious amounts of cash.
Advisers also ensure their clients get access to the products that work hardest for them. The financial services industry is awash with bear-traps, products with hidden charges, costs and penalties for the unwary investor. It is possible to figure these tricks out on your own, but doing so is a labour of love and the chances are you will miss at least some of them.
Furthermore, an experienced professional financial adviser will also be able to help navigate the many risks that face those saving for the medium and long term. How long will I live, what happens when markets rise and fall, what is the outlook for inflation and long-term investment returns, how should I spread my assets across different asset classes, how can I be sure a particular provider isn’t on the verge of collapse?
Perhaps most valuable of all, is what a financial adviser can do in helping you identify what it is that you really want to achieve with your investment strategy. We often find clients have never really asked themselves what their goals are – both financial and in life generally – until they sit down with their financial adviser. Money is freedom and setting out a strategy that puts your whole life on track is something worth talking to a professional about.
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