Knowing the True Value of Financial Advice



Posted on: 5th September 2018

It is never easy to explain the true value of financial advice to those who have never experienced it before. Here’s one thing to remember: If you ever meet with an adviser and they tell you they can bring you “superior investment returns”, don’t buy into it. We will pick back up on that later.

Things to Consider for Understanding the True Value of Financial Advice

When considering the true value of financial advice, there are two fee types to look at. The first is initial fees and the second is ongoing fees. We will break both of these down to help you understand.

Initial Fees

The initial work that is completed by a financial advisor could be seen as a “medical check-up” for your finances. Your current financial position is summarised so that you can be sure of where you stand. This is then assessed against where your finances need to be in the future. If needed, you will be informed of the recommended changes to be made along the way.

Of course, within this 3-line summary, there is a lot of technical work. Maximising tax efficiency and ensuring your investments are suitable and taking an appropriate amount of risk are just two. Then there is ensuring that you have the right financial products in place and that no costs are being wasted.

The value of the initial work is often much easier to “feel”. It is quite similar to adding an extension to your home, fitting a new kitchen or bathroom. It is a project with a beginning, lots of work in the middle and a final outcome. As opposed to these examples, however, the story does not end there.

Ongoing Fees

Your pensions are in place, investments have been made and you are protected against potential damage. It is common to believe that you don’t need to invest in ongoing advice, but it’s better if you do. Why? Because despite plans rarely coming to fruition without complication, the value is the ongoing process of planning. With a plan, you are able to see all available options and a view of every element that could be adjusted if necessary.

The initial work is finished within a short space of time. A plan was created for the sake of your vision of the future, as well as your goals and aspirations. Everything you have wanted to achieve is viewed as a variable factor. This includes how your income, spending and goals have and will change. Goals are important, but they may not stay fixed. Flexibility is key if you wish to successfully manage your finances. Your financial plan will need updating and amending on a regular basis. This is to ensure it is right for you at the current time of update, not the last time you looked at it.

Making the Right Choice

Let’s go back to avoiding “superior investment returns”. No one can tell you how any investment will perform against competitors, nor can they say whether the stock market will rise or fall. The market is a rollercoaster, but what’s important is how you choose to ride it. Having an independent financial advisor such as Haven IFA can help you make the best decisions for your finances and investments.

Part of what we offer from our ongoing service is to keep you secure when things take a turn and ensure that your investments are wise and kept safe. We will explain all possible risks in clear detail so that when things become rocky, we can be there to help create a smooth path.

True Value

How do you put a value on your investments? This can be difficult to do. The value of ongoing advice will come in peaks. You may have a few quiet years, but some will be busy. US investment giant Vanguard recently performed a study to determine the value of a financial advisor. They took into account everything a financial advisor can do for their clients and determined that the average added benefit to your investments would be around 3 per cent a year.

Talk to Haven IFA

While we cannot calculate the exact monetary value, it is clear that a good financial advisor is definitely a worthy investment. Haven IFA can be there to guide and support you for your financial future. Get in touch today and see how we can help with your investments for an enjoyable retirement.