Why you should be using a Financial Advisor

A financial planner/advisor is a professional, accredited, and regulated individual who helps you to organise your finances, manage your money and save & invest for your future. 

Your personal financial advisor will use the latest cashflow modelling software and other tools to project and plan your personal finances to ensure that you have enough saved for retirement, and for any / all other future needs. Your certified financial planner will also help you to make decisions with your money on matters other than purely retirement planning, helping you to reach your financial goals as efficiently as possible.

The terms "financial planner" and "financial adviser" typically mean the same thing, but as they don’t all offer the same services, consider each wealth management company on their merits before meeting with a financial advisor to assist you. The level of qualification, training, and experience that a professional advisor has will make a big difference in the quality of the advice you receive, and you should always make sure that both they and their company are regulated and accredited.

Whereas some people do their own financial planning, most people will be comfortable with trusting a professional advisor. An experienced financial planner will help to improve the quality of the financial decisions you make, and without a background in financial planning / financial advice, you’re unlikely to know all of your options without professional help. 

When it comes to the time that you consider hiring professional help to manage your savings and investments for the future, it would be helpful for you to know what to expect from a good financial planner. This will help you to tell the difference between someone who’s just a salesperson and looking for their commission, against someone who offers regulated financial planning advice, carries a valid certification or accreditation proof, and has a proven background within the regulated financial advice industry. 

Your first step towards your future financial independence starts with hiring the right professional planner, and this journey starts by you understanding exactly what financial planning is, and knowing what sort of working relationship to expect from the person you choose to work with, as well as understanding exactly what they’ll do for you.

What Is Financial Planning?

To help you determine which company or individual you should use for your financial planning needs, let’s look more closely at what financial planning actually is. Financial planning is the process of defining your financial goals, such as knowing when you will need to use your money and what you will be using it for, and then modelling a corresponding financial plan with specific steps you need to take to achieve those goals.

To give clear and accurate financial advice, a good financial advisor must gather a certain amount of both personal and financial information about you. All accredited advisors and companies will be fully GDPR compliant, and will offer you a copy of their GDPR terms and conditions, so that you can be reassured the information they gather is to be used to give you the most accurate possible advice, and will not be used for any other reason.

Your financial advisor will use the data they gather to create realistic and accurate projections for you, showing you when and how you can accomplish your goals. These projections are based on a set of market and economic related projections about inflation, average investment returns, how much you can save, and how much you will earn and spend over the time period dictated.

What Does A Good Financial Advisor Do?

An experienced financial advisor will be able to give you advice on all of the following: -

  • What you could do differently with your current finances

  • How much you need to save to achieve your future goals

  • What type of retirement accounts to have (Pension Funds, ISAs etc)

  • What type of mortgage you could have, if you should pay off your balance, or remortgage for a more favourable rate

  • What types of insurance you need (this can include life insurance, long-term care insurance, disability / critical illness cover, and sometimes property, key person, and health insurance)

  • How much to keep on-hand in your emergency savings fund

  • What changes you could make that might improve your tax situation

  • What rate of return you will need to earn on your savings and investments to achieve your given goals over the agreed time frame

  • Whether it makes sense for you to downsize your property, either now or in the future

  • What level of investment risk is appropriate for you, based on the information they gather about you, and what rates of return these investments would generate

Some financial planners can also provide estate (Wills and Trusts) planning advice and inheritance tax planning services. It’s a good idea for you to ask your financial planner upfront which of the above services they offer, and then to choose who to work with based on those that closest match your needs. Getting their recommendations in writing is always advisable, as it leaves no questions in the future about what course of action was recommended and when.

A regulated financial advisor will never make recommendations until they understand your goals, have completed an in depth financial and risk analysis for you, and have run a long term financial plan for you. Be aware that if you do meet with someone who starts talking about a particular financial product right away, even if they call themselves a financial planner, they are more likely to be a commission based salesperson and you should steer clear. 

 

No good financial planner would dream of making recommendations without first gathering all the appropriate information about you, including your account statements and data on all aspects of your financial life.

How Are Financial Planners Fees Paid?

You'll find that fee structures vary from company to company - again, be wary of commission-based salespeople who are interested in pushing one product rather than being interested in your overall goals. Typically, financial planners in the UK can charge you fees in one of the following ways, and will explain them in full to you during your first consultation: -

  • An hourly rate
  • A flat fee to complete a specific project
  • A quarterly or annual retainer fee
  • A fee charged as a percentage of assets that they manage on your behalf (Typically this ranges from anywhere between 0.5% per year to 2% per year. The more assets you have, the lower the fee usually is, however it can also be dependant on the amount of work needed to manage your portfolio.)
  • Commissions from any external financial or insurance products you buy through them
  • A combination of fees and commissions

Always ask your chosen financial advisor for a clear explanation of how they earn their fees, and remember that those who are regulated and accredited must offer this information willingly. 

What Types of Investment Advice Do Financial Planners Offer?

Your Financial Planner can also be a registered investment advisor. Investment advisors offer Investment advice ranging from more general recommendations as to what type of asset  allocation model you should follow, to specific recommendations on which investments to buy and sell. Some financial planners do also offer certified investment advice and investment management services, in addition to their financial planning services. Ask your potential financial advisor if they give specific investment advice, or only offer traditional financial planning services.

Start planning your future. Speak to us today.

Contact Us

Seventy Financial Planning
The Apple Store, Haggs Farm,
Haggs Road, Follifoot, Harrogate,
HG3 1EQ

01423 611004

[email protected]

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