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Point of View Archive

Financial Planning; do you invest time or money?

 

Most people could service their own car. It would take time to research how, but it is not an impossible task and, so long as you didn’t make any major mistakes, it could cost you a lot less than paying a car mechanic to do it. The same applies to plumbing repairs in your home, making new curtains for your living room or decorating your hallway. These are all jobs that many of us can accomplish if we are prepared to invest enough time to learn the necessary skills and to complete the job. However, most of us end up hiring someone else to do the work so that the job gets done correctly the first time around.`

There has been some mistrust of financial advisers and of the Financial Services industry in recent years, which is why many people have chosen not to seek professional qualified advice about their money, even when they have needed it.

But understanding the service a financial adviser provides can enable you to choose whether you want to invest time into taking care of your own wealth or, when it becomes more complicated, seek advice from a professional. A financial adviser, just like a trusted car mechanic or plumber, plays an important role in helping clients to better manage their wealth and to plan effectively for their future.

What a financial adviser does not do…


Predict the future. They absolutely do not know what is around the corner for stock markets, nor do they pretend to know which investment providers are experiencing problems behind the scenes. 

What they do is…


Help their clients to grasp a clear understanding of the potential risks they are taking with their existing investment choices, and to tailor that investment exposure to suit the individual needs of their clients. This means ensuring clients understand the possibility of market crashes and how long it could take for the investments they currently hold to return to their original value. It can also mean moving some existing savings or investments into more appropriate funds which are more likely to achieve the needs of the client, by either turning up or down the level of investment risk currently taken.  For instance, pension money which is designated for 30 years down the line can afford to be exposed to more investment risk than money which is being kept for shorter term emergencies, which could be better off held in a savings account.

What financial advisers don't have:


A consistent record of choosing better investments than anyone else. 

What they have is: 


A good understanding of which investments have done well in the past, which funds or managers have a good track record, and which are low cost and which are highly charged (although without the ability to predict the future, there can be no guarantees that these factors will be the same in the future). Just like servicing a car, those who have the time and inclination could do this research and this job themselves. However many people don’t want to invest the many hours (and years) in doing this, and instead they want a qualified person to provide this information for them and ensure their money is correctly invested.

What good financial advisers don't do:


Is recommend products to a client based on what they themselves can earn money from. Thanks to the change in regulation, clients agree up-front what they are going to pay for advice and what the adviser is going to do to earn it. Sometimes it's more convenient or tax-efficient for this fee to come from the product, but this still means that the client is paying for it, just not directly from their pocket. 

What a good financial adviser will do is:


Make clients think seriously and realistically about their future, and about what they want to achieve financially, how they are comfortable doing it, and by when. A good adviser will also help their clients understand the bigger picture, such as taxation and changes to pension legislation, and guide them to avoid making mistakes or not considering alternative choices.  

A good financial adviser relationship will often be demonstrated by their level of care and their investment into building long-term relationships with their clients; advice which focuses on finding solutions to needs, rather than purely transactional dealings. 

Not everyone knows how the financial services industry works, nor has the time or inclination to find out. Many people find pensions and investments complicated, and paying for guidance from a qualified financial adviser from a reputable company is one way they can remove this complication from their life. Financial advisers guide their clients along the right path in order to facilitate achieving their plans and goals, helping to protect and nurture wealth.

If you would like to find out more, we’d love to hear from you please email letstalk@sanlam.co.uk and we will be happy to help.

Date issued: 20.02.15

Please remember any views or facts expressed above are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice. None of the information should be regarded as advice. Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments and the income from them may fall as well as rise and is not guaranteed. Investors may not get back the original amount invested. Any tax treatment is dependant upon individual client circumstances and may be subject to change.

Sanlam is a trading name of Sanlam Wealth Planning UK Limited (Reg. in England 3879955) and English Mutual Limited (Reg. in England 6685913). English Mutual Limited is an appointed representative of Sanlam Wealth Planning UK Limited which is authorised and regulated by the Financial Conduct Authority.

Registered Office: St. Bartholomew’s House, Lewins Mead, Bristol, BS1 2NH.

Investing involves risk and the value of investments and the income from them may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.