RESEARCH FINDINGS

Financial advisers: Your views, our responses

  • 21 March 2022
  • 8 mins reading time

In December 2021, we conducted a survey on financial wellbeing in which we asked people for their views of financial advisers.* In this series of articles, we consider the five most popular of these views and ask some of our advisers for their responses to them.

"Financial advisers are too expensive"

For Paul Stratton, Financial Planning Director at Schroders Personal Wealth (SPW), the value of financial advice has the potential to far exceed the charges for it. And this value is not always tangible. ‘It could partly come from the peace of mind of having a professional assessing your financial position, to help you keep on track now and in the future,’ said Paul. Moreover, he believes that the potential value obtained from tax savings and investment performance could have the ability to more than offset the costs of advice, although this is not guaranteed.

SPW adviser Simon Ross points out that investors who lack experience of financial markets could face challenges if they go it alone. ‘It’s difficult to manage investments if you don’t know what you don’t know,’ he said. ‘People can get panicky when markets are low and sell, or they can take capital off the table if they’ve made a decent gain. This can potentially erode investment returns.’ Simon added that a financial adviser can be a steadying hand at the tiller who aims to help you avoid making costly mistakes. They can also give you the support you need to help you adhere to your long-term financial goals. He also said that many financial advisers have a knowledge of tax rules that non-professionals usually lack. Although they can’t necessarily provide independent advice in this area, advisers can use this knowledge to manage client assets more efficiently. ‘The tax landscape changes considerably over time,’ he said. ‘We are soon to go into a new tax year with a number of changes, including to national insurance.’

Fees are more transparent

Meanwhile, SPW adviser Richard Allan says the view that advisers are expensive may be influenced by changes in how advice fees are paid. He says that, historically, many clients may have thought they weren’t paying fees, but in fact advisers were paid by the provider of the funds or other assets the clients invested in. ‘These clients may never have seen the initial fees and up-front fees advisers charge and may think they are being short-changed,’ Richard said. ‘But what has actually changed is that we are more transparent about fees today.

Commenting on the charging structure at Schroders Personal Wealth, Paul said: ‘As a business we are open and transparent. And the charging structure is unbundled, which means charges are clearly broken down so you see exactly what you’re paying for. And the initial part of our service is free: you only pay if you take up our recommendations.’

"Financial advisers are really helpful"

‘We can certainly be helpful,’ said Paul Stratton, Financial Planning Director at Schroders Personal Wealth. ‘People have financial decisions to make and many can struggle to make them on their own.’

SPW financial planner Richard Allan pointed out that advisers can help you work out your financial and lifestyle objectives. ‘Some people don’t know what their objectives are,’ he said. ‘We help you plan for your future by looking at the degree of investment risk you’re willing to take. We can help you plan for the possibility of needing long-term care. And we can help you manage your assets more tax-efficiently, potentially saving you money in the process.’

Richard adds that advisers can give holistic financial advice, considering all of your personal finance arrangements, including pensions, investments, insurance arrangements and inheritance plans. ‘We take these elements and marry them so they work together,’ he said.

For Paul, the adviser’s role is to support people in making the right choices for their individual circumstances. ‘If you’re worried about your finances, we can explain what lifestyle choices are open to you. We can demonstrate whether your actions and decisions are affordable, with the aim of enabling you to enjoy your lives a bit more.’

Helpful tax strategies

Meanwhile SPW adviser Simon Ross believes advisers come into their own in helping clients increase and pass on their wealth tax-efficiently. ‘A number of strategies can be employed that most people would be oblivious to without a helpful adviser pointing them in the right direction,’ he said. Simon says one such strategy is to minimise potential inheritance tax liability by using deeds of variation, which let beneficiaries alter their entitlement from a will after someone has passed away. Another helpful strategy is utilising your unused pension relief and allowances from previous tax years, an arrangement known as ‘carry forward’.

Simon adds that our helpful Wealth Platform lets you track plans in real time and view a comprehensive snapshot of your financial position. And he said our advisers are very flexible. ‘We can help people by fitting around their schedules, perhaps meeting in the early morning or late evening. We can also meet in a way that suits them, whether it’s over the phone, through video conferencing, or face to face.’

"I'm not sure what financial advisers do"

The fact that many people don’t know what to think about financial advisers suggests to us that there is an information gap about the potential benefits of professional advice. Richard Allan, Financial Planning Director at Schroders Personal Wealth, pointed out: ‘In my experience, financial education and financial literacy is generally quite poor in the UK. I’ve come across some people who don’t even know financial advisers exist. For others, the only advice they received might be a minimal service for their pension scheme.’

In a similar vein, SPW adviser Paul Stratton said people who are not sure about financial planners may perhaps only have experienced mortgage or life insurance advisers. Alternatively, they may have used financial advisers only on an ad hoc basis. ‘We believe our strength lies in ongoing relationships with clients,’ said Paul. ‘If you haven’t experienced this kind of relationship before, then you may find it more difficult to have an informed opinion about financial advisers.’

Free consultations

For those wanting to discover the benefits of financial planning, SPW adviser Simon Ross points out that, at Schroders Personal Wealth, you can go through the entire initial advice process for free. ‘To start with, we offer potential clients a free, no-obligation introductory meeting, often a conversation over the phone, to see how we might be able to help with their needs,’ he said. ‘If it looks as if we could help, then we can also offer a free first full meeting. Should you then want to take things forward, we can create a financial plan for you and go through this at a second meeting. If you decide not to take things forward at this point, then there is still no cost to you. The cost only comes if you decide to implement the plan.’

In other words, you could explore the full advice process with us without paying a penny: all it’s costing you is the time you spend with us,’ said Simon.

"Financial advisers are not for me as I'm not wealthy enough"

Richard Allan, Financial Planning Director at Schroders Personal Wealth, believes that everyone, irrespective of their wealth, could benefit from financial advice in order to plan for their future. ‘Consider someone who has a workplace pension scheme in which they and their employer each contribute 3%. An adviser could show them that, even with a State pension, they might get less retirement income than they would like. So they could benefit from making greater contributions to that pension now.’

SPW adviser Paul Stratton added that a lot of people don’t know how much money they have in their pensions. ‘You may hold more assets than you realise,’ he said, ‘and informed pension advice could help you here.’ Paul added that many people, no matter what the size of their assets, could benefit from advice on using various types of insurance to provide financial protection. ‘This is about getting advice to protect you and your assets, no matter what their size,’ he said.

Lower cost options

Regarding Schroders Personal Wealth, SPW adviser Simon Ross pointed out that you can make a lump sum investment with us of as little as £10,000. And people wanting to pay in regular instalments can contribute as little as £250 a month into our Personal Discretionary Portfolio Service (PDPS). Simon added that our service can be tailored to your particular needs and can be lower cost if you don’t need a regular review to keep your financial plan on track.

"Financial advisers offer good value for money"

Paul Stratton, Financial Planning Director at Schroders Personal Wealth, believes that clients find value in two main areas of financial advice. First, they value the reassurance and confidence of having an adviser looking after their affairs. Second, they value the returns they can potentially achieve from their investments.

‘A lot of our value comes from helping you meet your financial and lifestyle goals,’ said Paul. ‘This involves considering where you are now, where you want to be in the future and how the future looks to you and your family. Your financial plan could help you get from the first place to the end goal.’

SPW adviser Richard Allan pointed out that good financial advice could help you cascade wealth down the generations. And he said that a modest outlay for advice can lead to potential savings through efficient tax planning.

A nurturing relationship

Value can also be obtained through advice across life stages, according to SPW adviser Simon Ross. ‘As you go through your life journey, you may start with small monthly amounts that build over time and it may be that, later in your life, you receive inheritances,’ said Simon. ‘We aim to offer value by accompanying you on that journey.’

* Schroders Personal Wealth, Financial wellbeing research results, December 2021.

Forecasts of future performance are not a reliable guide to actual results in the future; neither is past performance a reliable indicator of future results. The value of investments, and the income from them, may fall as well as rise and cannot be guaranteed and the investor might not get back their initial investment,

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits, which isn’t guaranteed, and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.

The value of investments and the income from them can fall as well as rise and the investor may not get back the initial investment.

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.

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