Planning more vital in uncertain times

Understanding your options is key to making the right decisions and protecting your money. That’s why finding a good financial adviser has never been more important

david prosser

7th February 2020

Would you buy a house without consulting a professional solicitor? Or treat a nasty illness without talking to a doctor? When it comes to the serious issues in life, most people depend on experts to help them make the right decisions – and planning the financial future of you and your family should be no different.

Yet a remarkable number of Britons fail to seek specialist counsel. Research published in 2018 by the Financial Conduct Authority (FCA), the UK’s chief financial watchdog, found fewer than one in ten had taken regulated financial advice in the previous 12 months. More than 46 million adults hadn’t seen a professional adviser, the FCA said, including more than 18 million with £10,000 or more in savings and investments.

Andrew Day, a director and chartered financial planner at Depledge Strategic Wealth Management, believes many people have the wrong idea about financial advice. “People think advice will be very costly, that it’s only for the wealthy or it will involve taking on too much risk,” he says. “The reality is very different. The overwhelming majority of people who commit to a financial planning review come out of the process with a very positive view of advice and more confidence about their future.”

The evidence supports this view. VouchedFor, the free service that helps people find and check financial advisers who have been vetted against stringent criteria and rated by clients, reports remarkably high levels of satisfaction among users. The 128,000 clients who have provided reviews through the service give advisers an average rating of 4.8 out of five; 91 per cent of them would recommend VouchedFor to friends and family.

No wonder. Financial advisers have a track record of helping individuals improve their financial position. One study, by the International Longevity Centre, found that people taking financial advice over a ten-year period saw their wealth grow by an average of more than £47,000 in subsequent years, compared with non-advised people. Significantly, less well-off people secured more value – those just getting by saw their wealth increase by 24 per cent after taking professional advice, compared with an 11 per cent increase among more affluent groups.

Jane Newman, who runs Jane Newman Financial Planning, says this sort of support can be life changing. “For our clients, their financial affairs are second only in importance to their health,” she says. “Good quality advice should provide them with peace of mind that this burden has been lifted by a qualified professional working in their best interests.”

In uncertain times, when everything from Brexit to climate change makes it difficult to work out what lies ahead, this support is even more crucial, says Kevin Mullins, the founder of Landmark IFA. “An adviser brings the ability to help you identify and quantify your key objectives – and then to work towards those objectives in a structured and logical way.”

The FCA is reviewing how it organises the financial advice market so understanding the types of advice available is important.

Broadly, experts fall into two categories: “independent” or “whole of market” advisers, who review financial products from across the whole market without influence from product providers; and “restricted” or “limited” advisers, who focus on one type of financial product or work with only a limited number of providers. Generally, those who offer investment advice, even if they also offer mortgage advice, will identify as a financial adviser. Whereas advisers who only offer mortgage advice, or only mortgage and protection advice, will identify as a mortgage adviser or mortgage broker.

Crucially, all advisers must have the right qualifications for their role and must tell you upfront how they will work on your behalf. They should also make it crystal clear how they will charge.

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