As you move into retirement, you're going to be making a lot of financial decisions and buying different financial products (pensions, annuities, insurance etc.) While there is a huge wealth of financial information on the internet (which you should make yourself familiar with), you may wish to take expert financial advice if you are unsure.
When to take Financial Advice
Financial advisers provide expert guidance and advice on high cost and complex financial products. They can assess your personal situation and needs and make a recommendation that is tailored specifically to you. Investments and products which you may consider getting financial advice for include:
- Life and health insurance
- Tax and inheritance planning
- Mortgages and equity release
- Long-term care planning
If you’re looking for something pretty straightforward such as building or car insurance, regular comparison sites can provide you with all that you need to get the best rates.
When you are investing money or planning your future with products such as pensions or investments, you should consider taking expert advice so that you don't end up with something unsuitable. This is where a financial adviser can make a huge difference. Paying for advice now could save you much more in the future and ensure that you are supported for the rest of your life. A financial adviser knows the current market, so can shop around for the best deal for you.
Financial advisers are regulated by the Financial Conduct Authority (FCA) and have a strict code of conduct and rules to stick to.
Financial Advisory Process
1. Introductory Meeting
When you first meet with the financial advisor, you will be able to have an informal chat with them and listen to all of the services that they have to offer. Normally, they will give you a “key facts” document which will outline their terms, fees and what they will provide for you. This is something that you need to consider for a while. Do not feel pressured to agree to anything before you have read all of the details.
2. In-Depth Analysis
If you are happy to go ahead with the services and fess that you have been offered, the advisor with then begin to carry out an in-depth analysis of your personal finances, what you wish your income to be and how much risk you are willing to undertake in your investments. They’ll use all of the information to suggest the best products available to you. They will follow this up with a full financial plan.
Once you have agreed with the financial advisor’s plans and recommendations and paid the fee, they will implement all of the details. You may also have the option of an ongoing review (but look out for hidden costs in this option). It’s important that you find the right advisor. Have a look at the which.co.uk website for advice on finding a financial advisor.
How you are Charged
Recent laws have ensured that financial advisers have to agree upfront how much you will be charged for their services, when you'll be charged and how payments will be made. There are three main options you will have for payment:
1. Flat fees
This is a one-off charge that covers everything from the beginning to the end of the process. This cost is specific to your needs but varies widely depending on the adviser. You may also be charged an initial fee for the financial plan and implementation and then a flat fee annually for reviews.
2. Hourly fees
An hourly fee is simple and it is easy to keep track. However, be very aware that you could easily end up paying more in the long run as there is less of an incentive for the advisor to work quickly. You could expect to pay anything between £50 to £250 an hour.
3. Percentage of Investment
This payment method will be calculated as a percentage of your assets. You could be charged an initial fee, ranging between 1% to 3%, and an ongoing charge between 0.25% and 1%. Make sure you work this out against other options to ensure you are getting the best deal.
How you can Pay
As with most products and services, you can pay through a number of methods. This might be all upfront with a cheque or cash. It may also be in the form of a standing order or direct debit. This should be agreed upon in writing with your financial adviser.
Planning your future and buying complex, high cost financial products is a stage of life that we all have to go through. Making sure that you are well informed can make a huge difference. Get in touch with a financial advisor if you feel you could use some help.