Should I Get A Financial Adviser (And Is It Worth It?)

Financial advisers, are they worth it? It’s a challenging question for any professional, so here’s the how to guide to know if a financial adviser is right for you.

Free Financial Guidance

The Internet can tell you a lot about investment and retirement planning, and best of all it won’t charge you a thing! 

Prefer a bit of human contact? Then get in touch with Pension Wise. Although strictly speaking they’re not advisers, they can provide you with some guidance and point you in the right direction free of charge.

Financial Adviser Charges

The other option is to get real financial advice. But be warned, the old days of ‘free’ financial advice are over. Nowadays fees must be expressed clearly and fairly. There are a number of different pricing models, but these essentially boil down to three main categories:

     1. Hourly - typically around £200 per hour
     2. Fixed fee – a flat fee which typically depends  on the time, complexity and value of the 
    work involved
     3. Percentage of assets under investment – typically around 4% of your assets 

Cards on the table – at Jones Hill we offer fixed flat fees. We always disclose the fees you will pay (in a format you can understand!) and explain our charges fully before undertaking any work on your behalf. We prefer fixed fees as they give you the peace of mind by knowing exactly what you will pay and it means that you are not being penalised simply for having more money (as percentages do). 

So how do the numbers stack up for a typical client who invests £150,000?

     1. Hourly – a full financial plan is likely to take around 15 hours, so will set you back               around
    £3,000.
     2. Fixed fee – typically range from £750 - £2,500
     3. Percentage of assets under investment – around £4,500 

Financial Adviser Value

Those are some pretty big numbers, so the real question is will a financial adviser improve returns enough to cover their own fees (and then some)?

In most instances, the answer is yes. A number of studies have shown that advisers help clients to reduce the ‘behaviour gap’, often to the tune of 1 – 2% per year. An adviser is more likely than you are to be able to see the big picture and take the long term view (remember Brexit?). They will be also able to improve your tax position and save you £££’s in otherwise paid tax. 

But there are other sources of adviser value that are just as real but won’t necessarily show up in your bank account. You might call this lifestyle value. 

Consider the time, knowledge and inclination required for self-managing your own investment and retirement plans. If you’re the type of person who doesn’t find reading personal finance particularly interesting, or has more exciting things to do with your life, then you likely would benefit from having a financial adviser. By being able to hand off your financial affairs to a professional, qualified expert you will gain the time and peace of mind to do the things you enjoy most. 

The bottom line is this, financial advisers aren’t right for everyone. For many people, a bit of Internet research, topped up by a visit to Pension Wise is likely to be just fine. But if you’re financial affairs are complex and you value spending the time on the things you enjoy, then you will likely to benefit from having a financial adviser. 

Remember, money comes and goes, time only goes.