PLANNING FOR THE FUTURE

I can’t afford a financial adviser.

  • 28 April 2020
  • 10 mins

Financial advice is for the wealthy. It’s dished out over a glass of sherry by professionals in bespoke suits in oak-panelled offices. These finance experts, with their charts and their investment jargon, charge handsomely for sharing their wisdom.

None of this is true. But, unfortunately, the myth of financial advice being unaffordable remains as strong as ever. In fact, it has probably tightened its grip in recent years after a landmark change to the regulation of advisers. [1]

Before 2013, advisers were generally paid by the providers of financial products in the form of commissions on the products they sold to clients. This is no longer the case, and those needing financial advice now have to pay for it. At the same time, the fees and charges of financial products came down to reflect the exclusion of commission payments.

It is a fact of human nature that nothing so disconcerts people financially than having to pay for something that they previously regarded as free.

Since then, the idea that financial advice is hugely expensive has gained ground. Last year, a joint survey by investment service OpenMoney and pollster YouGov found that the number of people who now believe financial advice is unaffordable had risen by 400,000 since 2015 [2].

But a report on the survey contained a possible glimmer of light: A large majority of respondents said they were unwilling to pay for financial advice, though many would consider it when buying a house, sorting out a pension or making an investment. [3]

This suggests that paid-for advice is not completely anathema, especially as a pension is the most significant investment most of us will make.

Nevertheless, the unaffordability myth persists, bolstered by horror stories of fees running into the thousands of pounds.

Myth buster: good advice is affordable and worthwhile

In reality, good financial advice can start in the hundreds, not thousands, of pounds. As with other service industries – from hairdressing to legal fees – your costs generally increase in line w ith the complexity of the service you need and how long you need it for.

If your affairs are relatively straightforward, you may only need one full advice session and perhaps a tune-up every few years. If your finances are more complicated, regular financial advice could help you keep you on track to meeting your long-term financial objectives.

At Schroders Personal Wealth, our advisers are always transparent and open with you about the fees you will pay for our services and for our recommended products and solutions.

Find out more on our fees and charges here: www.spw.com/pricing

The next question is, why pay for financial advice? Put simply, the right financial advice can be genuinely life changing.

Your first financial advice session could also be the start of a long relationship with a trusted professional whose knowledge of your needs will build up over the years, and who will help you find solutions to the different challenges you will face at the various stages of your life.

As a family doctor takes care of your medical wellbeing, and a solicitor takes care of your legal wellbeing, so a good adviser will try to look after your financial wellbeing. The security and comfort this can offer is beyond price.

This is especially the case in uncertain times.

Read more: How it works.

Important information

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or in part) without our prior written consent.

Fees and charges apply at Schroders Personal Wealth.

In preparing this article we may have used third party sources which we believe to be true and accurate as at the date of writing. However, we can give no assurances or warranty regarding the accuracy, currency or applicability of any of the content in relation to specific situations and particular circumstances.

Sources:

[1] https://www.fca.org.uk/publication/policy/fsa-ps11-01.pdf

[2] https://www.yourmoney.com/household-bills/half-of-british-adults-are-in-the-red-by-the-end-of-the-month/

[3] https://assets-global.website-files.com/5dcfc5ecafa6ed691b341c4b/5e0f67d32aef55698c39ca4f_OpenMoney%2C%20The%20Advice%20Gap%20Report%2C%202019.pdf page 14, August 2019

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