Ten reasons why you don’t need a financial adviser!
As independent financial planners, it’s common for us to hear all sorts of reasons why people don’t want or need financial advice. Here’s our list of the top ten answers people give for not seeking the help of a financial adviser – and our reasons why we think you should.
1. It will cost too much
It can sometimes be hard to judge the value of paying for financial advice, as it is intangible and some of the benefits will only become clearer over the longer term.
A good adviser will bring order and organisation to all your financial affairs and also stop you from making financial mistakes that could cost you dearly.
For around the same amount as an average family holiday, you can create and implement a plan that considers your entire financial life along with your aspirations and ambitions for the years ahead. It will give you the peace of mind that your finances and life goals are aligned and will aim to ensure your security whatever happens.
A week in the sun versus a lifetime of financial freedom and security – now that’s good value!
2. I don’t trust the financial services industry
We completely understand this. The financial services sector has always had a problem with trust and, even though it’s ten years ago now, the financial crisis didn’t help. However, the financial planning profession has evolved significantly, with the focus being on clients’ lives and not just their money.
The profession is also strictly regulated. Look for a Chartered or Certified Financial Planner, they are not only well qualified, but have to work to a strict ethical code.
3. Financial advisers are too pushy
For too many financial advisers, their only source of revenue is dependent on the product sales they make. This can lead to clients feeling pressured to buy a certain product.
Choose an adviser who has a separate planning fee and make sure you are paying for a plan rather than a product or investment.
Trust takes time, but ask for recommendations and visit a few professionals in their offices, to find out who you can comfortably work with. Make sure you ask lots of questions and if the chemistry doesn’t feel right – walk away.
4. I met with a financial adviser once – and never heard from them again
Often we’ll speak to new clients who have had a bad experience with another adviser. A common complaint is that they met with them once, bought a product from them and then barely heard from them ever again.
At Magenta we have clients that we have been looking after for more than 25 years! We see them every year for an annual planning meeting, and we have been with them through all their life transitions.
Building a strong and ongoing relationship with our clients is one of the most important parts of the work we do. We will continue to meet regularly to ensure that you are on track to achieve your desired financial lifestyle – not just once, but all through your life.
5. I don’t want to be judged on my financial mistakes
Some people have made financial mistakes in the past and dread the idea of having to face this, especially in front of their life partner.
Everyone makes mistakes – we’re only human! But, as planners, we know that we have to start from where we are and look to the future. We add value by challenging your thinking and helping you avoid mistakes in the future.
6. I don’t need financial advice – I can manage my investments myself
At the other end of the spectrum, there are those who feel that they don’t need any help in organising their finances and have all the knowledge they need to do it themselves. This may be true…….but all the evidence suggests that you’ll make more money if you take advice.
For example, this US article shows the difference in returns that individual investors in the Standard & Poors 500 see in comparison with a fund over a 30-year period. The return of the fund is 11.11%, versus the average investor return of 3.69%, a difference of 7.42% annually. A $100k investment earning 11.11% returns $2,358,275 over 30 years, versus $296,556 returned over the same time period at 3.69%. A difference of $2,061,719! The difference in returns is based on the investor’s behaviour. Investors reacting to news stories or short-term data will inevitably make bad decisions that destroy longer-term returns. We’re here to make sure investors avoid errors of judgment like this.
Even the most savvy investor can benefit from some support at times of market volatility, or when the media is screaming about the latest crisis.
Investment decisions are complex and don’t exist in a vacuum – they should be considered in relation to tax, estate planning and crucially, the return needed to achieve financial freedom. The full picture needs to be assessed comprehensively so that a good investment return isn’t lost in tax for example.
7. I can get advice from my friends and family
In our experience, this never ends well! Families who have “always invested in property” or “never invested in pensions because I don’t understand them” are all too familiar. But passing these tenets of wisdom down through the family can end up costing that family a lot of money in tax that cannot be recovered.
Financial advice is not a one-size-fits-all product that people can share between each other.
Decisions have to be made in the context of your own financial circumstances because everyone is different. It’s important to tailor your planning to the life YOU want to lead.
8. I don’t want to share my sensitive information with a ‘stranger’
We wouldn’t expect clients to share sensitive financial information unless they are very comfortable. We spend time getting to know our clients and understanding their hopes, fears and what matters most to them. We also make sure they understand that we need to ask for financial information to help them to create a plan which guarantees their future security and happiness. Any information they share with us is also treated in the utmost confidence and consistent with all relevant regulation surrounding the handling of personal and financial data.
9. Financial advice just isn’t for me
Financial advice benefits everyone, whatever their age, circumstances or income. It’s our job understand what you want to achieve, what matters most to you in your life, and to help you live the best life possible with the money you have.
But even the best made plans are useless unless you stick to them. So, we keep you engaged and accountable to the agreed course of action, the one that’s going to deliver you to your desired lifestyle.
10. I don’t need financial advice yet – I’ll get some in a few years
People sometimes try to convince themselves that they’ve got plenty of time to make financial plans for the future, and that it doesn’t need to be done just yet. But every day counts! You might not need to buy any financial products, but you do need to have a plan for the future.
The benefits of compounding over time mean there’s everything to gain from investing time and effort in your financial future today, and the reverse is also true: even missing out on a few years of contributions can have a dramatic effect on your outcome. The planning process is there to reassure you, it’s not something to be feared. As planners, we’re here to deliver you to your ideal lifestyle.
The sooner you start, the sooner you’ll get there. Now is the time to take control of your financial life.