In the next part of this article, we cover 5 key reasons you may need a financial adviser. If you missed part one, you can find it here.

The 5 key reasons you may need a financial adviser are:

  1. You have significant capital on deposit but nothing invested
  2. You don’t know how or where to best invest your money
  3. You have investments but are concerned about their performance
  4. You don’t have a plan for your finances or your estate
  5. You are likely to receive or leave a large inheritance and are unclear on the tax implications

1: You have money in savings but nothing invested

There are many people who like the security of letting their money build up in their current and savings accounts.

Typically this happens when someone is fearful of the risks associated with asset-backed investment.  More often than not this stems from a lack of understanding.

Not everyone feels confident to research, understand and implement their own investment strategy.

Surely it’s better to play safe and keep saving?

There are two factors to consider here:

Low returns

Since the financial crash of 2008 interest rates have been low. This is fantastic for borrowers but not for savers. Low interest rates mean low returns.

How hard is your money working for you?

If your money isn’t growing you need to save harder.  Do you have enough put aside for retirement?  Can you afford for this money not to be growing?

The effects of inflation

The prices of the most important things we buy keep increasing year-on-year.  Inflation is relentless and it isn’t going to stop.

For many years the rate of inflation has been significantly higher than the interest paid on most deposit accounts (and that’s before you deduct Income Tax from any interest you earn).*

This means that, while the value of money in savings accounts doesn’t fluctuate, with each year that passes you can buy less with it.

This is a much bigger risk than many people truly appreciate.

For example:

If prices were to increase at a rate of 3% a year, £10,000 today would be worth only £7,441 in ten years in real terms.

Money in a low-yielding deposit account may not fluctuate in value but that doesn’t mean it’s not at risk.

*Note: This information is correct at the time of publication on 15/12/21.

Do you need an adviser?

If this describes your situation, why not book a no-obligation call or meeting with a well-regarded Independent Financial Adviser to help understand how your money could work harder for you.

If your money is sitting in a low interest account, a conversation with an IFA will help you explore your options.

2: You don’t know how or where to invest your money

Investment decisions can be complex.

Knowing where to invest your money can be a minefield for the average person.

As we mentioned earlier in this series, there are a host of online resources available to help you learn. There are platforms that allow people to invest their money without advice.

The question isn’t always how or where to invest, but “Why?”.

Investing should be seen as a long-term strategy.

Effective investing should always start with a plan.

Trying to work out how much money you’ll need for retirement, to buy a holiday home or pay for a child’s education is no mean feat.

Of course, you can try to do this yourself.  But why wouldn’t you enlist the services of an expert to discuss your plans and unique requirements and create a financial plan to help realise these dreams?

This is where wealth planners and financial advisers provide the most value.   They’ll work with you to build up am accurate picture of where you are now, where you want to be and what you want your financial future to look like.

Do you need an adviser?

The first thing an independent adviser will do is discuss your current circumstances.  What assets have you already accumulated? What debts do you have?  Where are your sources of income?  What do you need to maintain your current standard of living?

Then your adviser will discuss your goals and objectives.  What are you working towards?  A first home? Funding your children’s education? A holiday home? A comfortable retirement? Leaving a legacy to the next generation?

The next stage is to look at all of the options available to you.  This is where independent advice is important – you don’t want a sales pitch at this stage.  You want good, robust, impartial guidance.

Your adviser should put you in a truly informed position, ensuring you understand all risks and costs as well as the potential benefits.  They should “stress test” your plan, looking at the ‘what if’s’:

  • What if markets crash?
  • What if you encounter health problems?
  • What if you lose your job?
  • If you’re a couple, what if one of you dies leaving the other to manage alone?

This is not an exhaustive list.  Your adviser will guide you through this process based on your personal needs and circumstances, knowing what questions to ask and which scenarios should be considered.

Based on all of this your adviser will be able to make a firm investment recommendation that you can be assured is appropriate to your need and objectives and will withstand whatever life throws at you.

3: You have investments but are concerned about their performance

As we all know, the value of investments can go up or down.

The value of investments can fluctuate due to:

  • Market corrections
  • Local or global news events
  • Fund managers making poor decision
  • A downturn in a specific market sector

This isn’t an exhaustive list.  In reality, markets move in both directions due to investor sentiment.  This means sometimes markets will rally or dip for no discernible reason.

Investment performance isn’t only down to the underlying markets.  Costs and charges, for example, can make a huge difference to your overall return.  It’s one thing having a top-performing pension or ISA portfolio but if most of your growth is disappearing in fees to the fund manager or product provider you may find you’re going nowhere fast.

Many who are concerned about the performance of their existing investments didn’t even chose them for themselves.  An old workplace pension; shares or unit trusts you’ve inherited; a policy sold to you by a high street bank who no longer offer face-to-face advice; a contracted-out pension policy set up by someone you haven’t heard from since the 1980s.  There are many ways by which you may have come to own an investment you don’t fully understand.

It’s not uncommon to experience high levels of stress due to failing investments. People can often feel as though they have to address this on their own.

An experienced financial adviser is a highly skilled individual. They will have gone through years of training, qualification, examination.  The more experienced they are the more downturns, recessions and tricky situations they will have experienced.

A good financial adviser will offer a steady hand and a calm approach in times of market fluctuations. They will dissuade their customers from making poor decisions based on emotion rather than reason and will back up their advice with clearly presented research.

Additionally, they have the experience to align your financial objectives and attitudes to risk with the right investments and to ensure you are getting good value for money in respect of the fees and charges associates with the policies you hold.

Of course, IFAs charge a fee for their services. Before engaging an advisor you should satisfy yourself that these fees offer good value relative to the service you will receive.

Your adviser will formulate a bespoke financial plan based on your personal circumstances and goals. Coupling this with their years of experience can be the difference between realising those dreams and not.

Do you need an adviser?

If you’re concerned about the performance of your existing investments a good adviser will start by getting to know you and understanding where your concerns stem from.

Are you concerned that your investments are too volatile?

It may be that they’re not appropriate for you.  A good adviser will help you to find the right balance of risk and potential reward to help you sleep soundly at night.

Are you concerned that your investments aren’t making you a decent return?

It may be that they’re poorly managed or are too conservative for you.  A good adviser will help you to look at the performance of your investments relative to the rest of the market, weeding out any under-performers.  If your current arrangement doesn’t satisfy your appetite for risk your adviser will present you with options that may increase the potential for longer term growth.

Are you concerned that your investments aren’t providing you with a sufficient income?

Long-term planning is especially crucial when you are reliant on your pensions or investments for income.  A competent advisor will create a detailed model, taking into account not just your current circumstances but also your future needs.

For example, could you afford to take a higher level of investment income now, knowing you will receive a State Pension at some specific future date at which time your investment income could be reduced without affecting your standard of living?

Sometimes it can be advantageous to alter the underlying asset mix of a portfolio to include more income-generating investments.  Sometimes it’s possible to increase income via additional tax-efficiency or a reduction in charges.

If any of these scenarios feel familiar to you then why not book a no-obligation meeting with a well-regarded Independent Financial Adviser to help understand how your investment performance could be improved?

4: You don’t have a plan for your personal finances or your estate

We’ve mentioned a financial plan a few times in this series.

Why is a financial plan so important?

Look at it this way: The most successful sports teams over the last 30 years didn’t just show up, play and win.

They made plans.

They had a plan for each game. 

They had a plan for each competition they were in. 

They had a plan for youth development and new player acquisition.

They had a plan for every element relevant to the performance of the team

An experienced Financial Planner or IFA can help turn your finances from Sunday League pub team to a Premier League operation.

They will take time to understand your current financial situation and ask about your future goals and aspirations. A good financial adviser will understand what important life events lie ahead and how they are likely to affect your plans.

They will conduct research and make recommendations specific to your goals.  The initial plan will be implemented but reviewed regularly.  Your circumstances and objectives will change over time; a good plan will change accordingly.

Your adviser should be someone you contact regularly and openly.  You should always feel well informed, relaxed and confident that your finances are in good shape to help you achieve the life you aspire to.

How about estate planning?

A good personal financial plan should aim to ensure your money outlives you.

It’s important to consider what will happen to your assets in the event of your death, whether that be an unexpected tragedy in the short term or whether you live to a ripe old age.

An experienced financial adviser will help you put together an Estate Plan. An Estate Plan ensures your assets are handled according to your wishes after you die.

Effective estate planning will also consider the potential costs of long-term care, Inheritance Tax and the impact on these on your beneficiaries.

If your death would leave your family in financial difficulty a good adviser will help you to identify this well in advance and to make adequate provision, perhaps by way of a life insurance policy or similar.

If your estate is likely to be subject to a significant Inheritance Tax charge and this is of concern to you, your adviser will help you to plan ahead to mitigate this.  This may involve: Trust planning; making gifts during your lifetime; covering a potential tax bill with a life assurance policy; considering investments that are IHT exempt, or; a combination of the above.

5: You are likely to receive or leave a large inheritance

Many in this situation are unclear on the tax implications.

A large inheritance could be subject to a substantial tax bill from HMRC.

There are many legitimate ways you can mitigate an IHT liability but almost all involve forward planning.  If you wait until the tax is due it’s too late/

It all starts with a conversation with an Independent Financial Adviser and a decision to make a plan.

Who is reliant on you financially?  What support would they need in the event of your death?

Is your aim to spend it all before you die? How much can you spend without the risk of running out?

Do you wish to leave gifts to charity in your will?

These are just a few of the questions to consider when making your Estate Plan.

Looking for a review of your finances? A financial adviser can help

We’d love to hear from anyone:

  • Looking to start their investment journey
  • Keen to build a plan for their family’s future.
  • Requiring a review of their current savings and investments
  • Concerned they don’t have the right protections and insurances in place
  • In need of an estate plan

If this sounds like you, contact us today for a complimentary one-hour discovery session to see where we can help.


Note: This article doesn’t constitute financial advice. Your capital is at risk when investing in equity markets. Past performance is not a guide to future returns.  Investments can go down as well as up and you could get back less than you originally invest.