Should I get a financial adviser?

Most people go through life without consulting a financial adviser – quite possibly because you don't necessarily need one to help you manage your money on a day to day basis.

But, if you believe you may never need one, then you could be mistaken and it could leave you poorer.

There are certain life circumstances that could lead you into the direction of one, whether it’s for pension planning, to help reduce your tax liabilities, protect your wealth, or to help you invest.

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Those who do use a financial planner are nearly £48,000 better-off after 10 years, according to the International Longevity Centre UK in 2017.

A survey from wealth management firm St James’s Place shows 84% benefit mentally or emotionally when they use a financial planner.

There are a number of trigger points to consider that could mean you need to see a financial adviser – no matter how experienced you are with money.

Lisa Conway-Hughes, chartered financial adviser and founder of LCH Wealth, argues that people should speak to an adviser depending on what stage they are in life, if they have come into inheritance or if their earnings have increased.

“For example, if you are at least 10 years away from retirement, then a financial adviser can discuss what assets you should be holding and for what time frame; they can help you think about what your plans are for the first 10 years of retirement and adjust your portfolio to match that,” she says.

“DIY investors don't always have it right, and sometimes we see portfolios that are simply way too skewed towards the US, for example.”

Here’s what you need to think about when considering whether you need a financial adviser.

Life-changing moments and money

While you do not need a financial adviser to open a bank account or set up your ISA, there are a number of trigger points in your life that could require the expertise of an adviser – even if you are experienced and confident with money.

This includes:

• Earning over £100,000. This is when your Personal Allowance drops, and it is zero when you earn more than £125,140.
• If you are at least 10 years away from retirement. A financial adviser can discuss what assets you should be holding and for what time frame to ensure you reach your retirement goals.
• Investing: a financial adviser can help match your portfolio to your needs.
• Inheritance tax – looking at how to reduce your IHT bill.
• If you receive a life-changing lump sum of money, a financial adviser can help you do something meaningful with it.

According to Canada Life, 29% of over 55s who have already retired are not living the retirement they dreamed of, but taking guidance and advice can help out people get on the right path and manage their expectations.

One in ten retirees (11%) did not anticipate just how much money they would need in retirement, and wished they’d planned properly (11%).

Tom Evans, managing director, Canada Life, says: “Planning your retirement and ensuring it is flexible enough to navigate the many challenges you will face is vital to feel in control to enjoy your later years. Engaging the services of a qualified financial adviser early on is a fundamental part of that process. An adviser will not only be able to help with product choice, investment selection and tax, but will help you navigate any unexpected bumps in the road along the way.”

Building financial security

Seeing an adviser can help build financial security, but it can also help with your overall financial wellbeing. A survey from wealth management firm St James’s Place shows 84% benefit mentally or emotionally when they use a financial planner.

If big money decisions are stressing you out, then this is also a good reason to seek expert help.

How much do financial advisers cost?

If you are seeking expert help, then it does come at a cost. In most cases though, the value you get far outweighs the fees you pay.

Standard fees for financial advisers are around 1-1.5% of your total investments.

If you have a one-off need to see an adviser – for example because you have inherited a large lump sum or maybe even won a hefty Premium Bonds prize – then you can use a financial adviser at the cost of a fixed fee, which could be hundreds or thousands. The actual cost will depend on the work involved.

Some advisers charge an hourly rate which could be around £75 to £350, according to the government’s MoneyHelper.

You may decide to stay with your financial adviser for life and in this case, you will have to pay an ongoing service charge. If you decide to go down this route, make sure your adviser is earning their keep and reviewing your finances regularly.

Your first consultation is often free, at which point you can discuss the best structure for you.

It’s also worth noting that many advisers have a minimum assets threshold that could range from as little as £75,000 to £250,000 – so if your wealth is not big enough, they are unlikely to take you on as a client.

How do I find a financial adviser?

It’s a good idea to talk to a few financial advisers first. You should look to work with someone that you have a good rapport with and feel you can trust.

“If you get a good feeling from them, and they have the right qualifications, then go for it,” adds Conway-Hughes.

The minimum qualification you’re looking for is a level 4 diploma. Check if they also hold professional membership at bodies such as the Personal Finance Society or the Chartered Institute for Securities & Investment.

You can find a financial advisor via Unbiased or Vouchedfor. You can also ask friends and family for recommendations.