4 financial advice myths, debunked
Working with a financial adviser for the first time can be daunting. It means trusting someone else with your financial information and plans, and many of us are reluctant to do that—even when we know we need help.
The reality is that opening up to an adviser would let them see your full financial picture and help them to better understand your situation and aspirations – they can then provide advice that’s tailored just for you.
A good adviser will tackle the initial challenge you come to them with, they’ll then put a plan in place and deal with the challenges that are an inevitable part of life along the way.
We wanted to find out first-hand what stops people from taking advice, so we asked a wide range of customers for their views. Our research uncovered four common misconceptions that can stop people from benefitting from advice.
Myth 1: I can do my own financial planning
Reality: Of course, you could handle financial planning on your own. In fact, two in five of us here in the UK said they manage their own finances. But doing it yourself doesn’t necessarily mean you’re being effective and maximising the opportunities available to you or reacting quickly or appropriately to market moves and legislation changes.
Financial management is a job that requires keeping a constant finger on the pulse of markets and trends. Have you got the time and dedication to do this?
By working with an adviser, you can still have control over your finances but you’ll have the added expertise, knowledge, and strategy of a professional on your side. Having an adviser as your expert could make things simpler, safer and the decisions a little easier.
Myth 2: Financial advice is only suitable for ‘really rich’ people
Reality: While it’s true some advisers focus on customers with a certain amount of funds available, many advisers work with customers at all levels of income and assets.
One-quarter of those we spoke to thought professional financial advice is only for people with more than £100,000 to invest.
An adviser’s expertise and technical knowledge can bring value to those with more modest funds to invest, especially when it comes to more complicated matters. Because advisers tailor their advice to your specific situation, you can benefit no matter where you fall on the wealth scale.
Myth 3: Financial advice costs too much
Reality: Don’t make the mistake of believing you can’t afford advice, without knowing how much it costs.
When you speak to an adviser they’ll be able to give you a guide on costs upfront – they may charge a flat fee or make a charge as a percentage of your total assets. A good adviser will be transparent about this and you shouldn’t be afraid to ask.
Survey respondents who’ve previously worked with financial advisers say that ‘peace of mind’ was the leading benefit. What price can be put on knowing you’ve done what you can to take care of your finances and your family’s future?
Myth 4: I might pick a poor adviser
Reality: You’ve probably had some experience with tradespeople like plumbers or electricians. If you’d had a poor experience, it most likely wouldn’t stop you from hiring those type of professionals again. So rather than doubting your ability to hire a good adviser, learn about what to look out for and trust your instincts.
Consider asking friends or family members for recommendations. Make sure the financial adviser you’re considering is qualified and meets professional standards and is authorised by the financial regulator, the Financial Conduct Authority.
When you’ve found a firm that you’re considering working with, ask questions to find out whether they’re the right fit for you.
And take heart that 75% of people from our research who sought advice were satisfied, or very satisfied, with their experience.
If reading this has changed your mind about seeking professional advice, you can read our article that gives Five top tips to help you find the right financial adviser.
You can also use unbiased.co.uk or moneyadviceservice.org.uk to help you in your search.