REPLAY: Do I need a financial adviser?
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📺 Are you wondering, "Should I work with a financial adviser? How do I find one that suits me? And how much does it actually cost?" Well, you're not alone. In a sometimes complex financial landscape, managing your finances effectively is crucial, and sometimes, getting help and support is essential. Today's episode is all about demystifying the world of financial advice. I recently had a fascinating conversation with Karen Barrett, the Founder and CEO of Unbiased, and she shared valuable insights on what you can expect from a financial adviser and how they can add value to your financial journey.
This webinar complements our ongoing podcast series, "The Road to Wealth," a 7-episode journey where we explore the financial challenges women face throughout their lives. Topics such as death, taxes, debt, wealth and well-being, protection, investing, and relationships will all be on the table.
what is the role of a financial adviser, and how has financial advice evolved?
A financial advisor's role really just helps people choose and manage investment savings, pensions, mortgages, and insurance products. Retirement, taxes, and things that are confusing or difficult because they keep changing.
The government keeps changing thresholds on ISAs and rules around taxes. It's an advisor's job to stay up to date with that.
In the process of dealing with their clients, advisers understand the themes that are coming out in terms of what people need help with.
They also help you make decisions and be more of a money coach and life coach than you might think. It's not just about percentages and fees and rates. It’s about giving people the confidence to make a plan and live the life that they want.
Achieving your potential encapsulates more than just finances. How do you have the life you want if you haven't got the funds to support those decisions and choices? Things like homes, children, travel, work - that's all related to your personal financial situation.
It makes sense that a financial advisor would understand that and have empathy and want to come up with a plan that reaches those broader goals. They also have to match your beliefs.
They don't want to do any harm through their investments. They want to do good, and the industry is definitely evolving there. Many investments now have scorings in terms of how green they are or their social impact.
In relation to sort of the women's angle, women don't actually have different financial planning needs per se. But there are considerations, and you won't be surprised to hear that the gender pay gaps and earning potential are one of those things. There are also career breaks, for example, that we have to be mindful of when we are planning our finances.
Things are changing. 26% of women in the UK are now the household breadwinner. We’re earning more as a group, and that number is growing. By 2025, 60% of the wealth in the UK will be in the hands of women.
We can't rely on a man to be in the relationship and provide, and we absolutely should be planning our own finances and lives and achieving really what we want to.
The pandemic there was absolutely a catalyst where women were getting more involved in their finances
Plus, with the cost of living crisis and interest rates increasing, women are looking at the bills, and the mortgage payments, and it's getting people interested in financial planning for the longer term.
Financial advice is served best for those big, complex decisions that you can't do yourself.
How do you know you need an adviser, and how do you find one?
There's a little bit of imposter syndrome surrounding people who might want to consider financial advice.
It’s more about the mindset and the threshold at which you should get advice.
If you've got debts, you haven't got any rainy day savings fund anywhere or you're not employed yet and you're planning on being in the future, then I would wait and sort out those issues before contacting a financial advisor.
If you have the attitude that you are planning for the future and you want to be in a certain financial situation in the future, then you don't need anything before you go to a financial advisor. If you are looking to set up some investments and can pay in, it doesn't matter if it's small amounts, but regular amounts over a period of time, or you are looking to set up your pension plan or your retirement plans do go and talk to a financial advisor.
You can have initial chats without being committed to anything. They really do understand where they can add value and they're not going to say yes, come pay me money if it's not going to be right. They don't want those types of clients where they're struggling to get them to pay them the fees and there's no benefit.
One of the biggest barriers to seeking or even asking a financial advisor what they can do is the fees. But, this is an investment in yourself and in your future financial self.
The adviser should be able to save you money that more than covers the fees that they're charging.
Next, a lot of people think that they need to be a lot wealthier before seeking financial advice. All you need however is to be able to want to plan for the future. It's as simple as that.
And for some people thinking, oh, I haven't done this, I've left it too late — now's a great time to start. Nobody is judging people. Advisers encourage people to look at their finances to make them better off.
It really is about people wanting to do the best for themselves and their loved ones. Financial advisors are experienced and qualified to help you get to the point that you want to be at.
Being prepared with a little script can do wonders to just say, right, I'm going to do this, this is what I'm going to ask. Start the communication with an advisor and just have a chat.
Larger firms have individual advisors within them that will cover various areas of expertise. If someone's working in areas such as taxes, it pays to really be focused on that one area because then you become such an expert and you know everything so well that the client benefits.
Typically, a financial advisor will look at pensions, investment savings, etc. Taxes are quite separate and also mortgages. Someone might have a mortgage broker that was different to the person that was doing their financial plan and helping them with those longer-term investments and pensions.
There are different options out there on the market. If you want someone who's going to look after everything that you have to do with finances, then find a firm that's big enough to cover that.
Is it important to work with independent financial advisors? How do we know that they're the right person, they're certified? There is a lot of concern around commission bias, or the fact that they're selling a product and not working on behalf of the client or the person
That’s why it’s important to ensure that the advisor that you connect with is regulated. You can do that on the FCA website. You can put in the individual advisor's name or the firm name and it should bring up the number and you should see them listed there.
Any of the advisors you find on the Unbiased website will always be regulated and you can trust that any advisor that you find on the website will be regulated.How much are fees?
What about the fees?
There are three ways in which advisors will be paid. One is fixed fee, so the advisor and you will agree what the job is, what the service is. This could be something like setting up a pension or some tax advice and you agree a set price for that work.
The second way is the percentage of assets, and this is typical where you've invested some money and are probably planning on adding to that pot over time. So that would be, for example, some investment ISAs or funds, or a pension, which effectively is an investment fund. That advisor will manage your investment portfolio over the longer term.
In terms of the third way, this is an hourly rate. The typical hourly rates for an advisor are about 150 to 300 pounds an hour. People do generally go for the fixed fee because it means they're not signing sort of an open checkbook. We all like to know what are we paying and what are we getting for it.
What are the upfront fees? Are there any ongoing fees? Are there any one-off fees? Are there fees for transactions? Get a real sense of over a year, what is the service and what am I gonna be charged for? And then ask, how does that compare with the market? Don't hesitate to go and speak to two advisors and see what they say.
If one is massively high and one's lower, why are you so high? Do you provide more of a service? Why are you priced low?
There is a whole list in between of different things you can do and different price points just to really give people a sense of what it costs for that advice.
Always try and negotiate. Ask about a payment plan or how can they structure it differently to better reflect your circumstances and the work that you need to be done.
In terms of if you want to change advisors, either give the feedback to the advisor if they're unable to change or you can stay with them and if not, you just change and you move.
Around 16% of financial advisors are women. Find a female financial advisor, they understand career breaks and divorce and the way that you might be looking at the rest of your life.
You are going to be sharing your hopes and aspirations with this person so it really does pay to to work with someone that you feel you're going to get on with.
Keep in mind there will have been some terms and conditions that you would've signed up to. These will vary, but it should be quite simple in terms of changing your financial advisor.
When you are running a business, you do have personal finances and actually, it takes, it's more important to ensure that your personal finances are sorted as well as the business ones. It’s recommended that people do get financial advice at that time (of setting up a business). It has ramifications for pensions, how you pay yourself, mortgage rates etc.
preparing for the first meeting
The best way to prepare: one is to get your paperwork together. Anything that you might have in terms of your wages, your savings, any investments or any mortgage payments, anything that you've got — put it all together. You don't really want to be paying your advisor to sort out admin. You want them to be thinking about the advice and setting up a plan for the future for you.
Then, it’s mentally thinking about what it is you want to achieve. Do you have you got a short-term goal? A longer-term goal? Are you going in open-minded? Are you willing to listen to whether they can advise you on what you should be thinking about and what options you have coming up ahead of me?
You should also probably be calling at least two advisers. When it comes to asking questions, feel free to ask an advisor anything. It should never feel uncomfortable. It's your money, they're there to help you.
When you're speaking on the phone initially, keep in mind that it could be the advisor that would be looking after you or someone who manages customer relations. It’s all about figuring out if this is the right fit for you or not.
When you have all these questions, make sure you write them down. You don't have to buy their services, the first meeting is testing the waters.
Building a relationship with a financial adviser
Invest some time talking to them. The initial interaction should tell you a lot: is this someone that you feel that you could get on with? Try doing an initial piece of work with an advisor to get a sense of whether you can work with them.
It is a slow burn. Finances aren't just sorted in a moment, it's only over time do you know if it's successful. Having someone in your corner is better than not having someone in your corner.
Advisers are dealing with people like you day in, day out, yet this is the first time you are doing this.. That’s why it’s okay if at first, it feels daunting.
Try and react to the financial advisor's requests in a timely manner. Sometimes we don't want to do the life admin and we'd rather do other things. But it really pays off to get sorted and to set a plan in place as early as you possibly can. Even if you are only able to put a little away on a monthly basis, time has such an impact on the size of your portfolio or funds or savings over time - so there is no better time than now.
Advisers come in when you're dealing with those big financial decisions. Get one now and keep them for life — that is the ideal. They can really help when things inevitably change and work with you through your life as you. Particularly when say markets are volatile. If you were doing it on your own, you might think, oh, I've lost 10% of my portfolio, I'm exiting the market. And they'll go, no, no, no, we've seen this before — hold your nerve.
Interest rates are peaking and mortgage payments have gone up. How do you navigate that? It's in those times of need that an advisor that's been with you for the longer term can really help you.
However, it depends on how you want to work. If you just want to have different projects and things that you want to do throughout your life, pay for that. It also depends how confident you are managing your finances.
Advisers will typically set a plan that's going to cover a few years. They normally check in twice a year.
Particularly ahead of the tax year end, they’ll ask if you are happy with your pension contributions, etc. Seasonal things that you need to do as a piece of admin.
It also depends how good you are with your day-to-day management in terms of your budgeting and sticking to the plan. Also, it depends on how much change there is in your life. Advisers will help you navigate where things aren't going as, as well as they should, as well as when things are improving.
It pays to do your homework when it comes to financial advisers. Check to see if they are regulated, check that they're on the Unbiased website, ask to speak to the existing clients, contact them yourself, find their number and ring them up, have a good conversation with them and make sure that you feel they're saying the right things that resonate with you.
If you're not on track, an advisor can give you solutions to how to get on track. You could well be making the right choices, but it pays to have a second opinion when the pot of money that you've worked hard all your life to achieve is at risk in terms of the decisions you make.
PODCAST
This webinar complements our ongoing podcast series, "The Road to Wealth," a 7-episode journey where we explore the financial challenges women face throughout their lives:
https://pod.link/1520695849/episode/e839d25c5b41ad4c15287426ef4d28d7
RESOURCES
Cost of advice tool: https://www.unbiased.co.uk/tools/cost-of-advice
Unbiased.co.uk adviser checklist: https://www.unbiased.co.uk/find-an-adviser-checklist.pdf
SPONSOR
Thank you to our partner Unbiased, a matching service that helps to connect you with the most experienced and regulated financial experts: https://www.unbiased.co.uk/
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