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What is financial advice? And why might I need it?

Octopus Wealth16 May 2019

‘Financial advice’. You’ve probably heard of it, but what exactly is it?

Well, it depends who you ask. For some people, financial advice is simply a matter of finding out where to invest your money to make the greatest returns.

For others, it might be a case of getting the best deal on your mortgage, taking tips on how best to use your ISA and pension allowances, or helping you to avoid any inheritance tax that might be looming.

Some people might have specific goals that they’re looking to plan for – like paying for their kids’ education, or funding retirement.

While others might just want someone else to take care of all things financial, so they don’t have to.

Although ‘financial advice’ can mean different things to different people; at its simplest, it’s about helping you make the most of your money.

You might be completely new to the world of financial advice (91% of the population!). You may have thought about it fleetingly in the past. Or you might be starting to think that you’re reaching the limits of your expertise and that your money could be doing more in the hands of an expert.

Either way, if you’re considering getting some help and want to know what it involves — or aren’t sure of what value it can add — this blog aims to help.

The basics

Most financial advisers will cover ‘the basics’ — the standard procedures that will help to whip your finances into shape:

  • Using all available tax wrappers to make sure your money is working as efficiently as possible
  • Suggesting suitable investments that achieve the sort of returns you’re looking for, at a risk level you’re comfortable with
  • Ensuring your portfolio remains properly balanced and within the confines of your risk appetite
  • Providing counsel on how to maximize your pension savings
  • Rationalising existing assets from property to equities
  • Making sure your estate is protected
  • But an adviser’s role isn’t limited to scouring spreadsheets and making investments.

It’s about more than money

A good adviser is as focused on your everyday aspirations and anxieties as they are on the fluctuations of the stock market.

A financial adviser’s job is to work out your life ambitions, then create and implement a plan to get you there. Simply put, and done well, a financial adviser will help to put you on track to achieve the life you want — and steer you clear of the life you don’t.

Think about the big events in you and your family’s future — retiring, sending your kids to university, paying off a mortgage, relocating, changing career. Your financial adviser should be your co-pilot when you’re navigating any big changes in your life. They’re life planners more than anything.

Can’t I do it myself?

Many people manage their own finances, and plenty do so successfully. You might be someone who handles your own portfolio, uses ISAs to maximise your tax allowances, and understands the benefit of having a diverse investment portfolio that’s geared towards long-term returns.

You might have made certain your pensions aren’t going to exceed the lifetime allowance and incur a hefty tax bill, made a plan for mitigating inheritance tax for your children, ensured you have relevant insurance protections in place and allocated an appropriate cash balance to cover everyday needs in the case of income or investment loss.

And you might be someone who scrutinises the market, assiduously follows changes in regulation and tax allowances, and adjusts your forecasts and investment strategy on a continuous basis accordingly.

But if all of that’s just given you a headache, you’re probably someone who does few or none of these things. And there’s no shame in that; the sheer volume of work that’s involved in first developing and then maintaining a profitable financial portfolio can make it a full-time job in itself.

Of course, it’s possible to do everything that’s needed as a casual investor on your own behalf, but be honest with yourself. Do you have the necessary knowledge? And, just as important, do you have the time to do it properly? Finally, do you actually want to?

But can I trust someone else?

In short, yes. A financial planner or adviser is a highly qualified expert in managing money, who is regulated by the Financial Conduct Authority (FCA). It’s worth considering that they’re also a third-party, someone who doesn’t share your biases and can be dispassionate about making the best decisions in your long-term financial interest.

The early bird catches the worm

As with most things in life, it’s never too early to start planning — but it can be too late.

Left to your own devices, it’s all too easy to push your finances further down your list of to-dos. You haven’t got round to researching your pension options yet, you keep meaning to open that ISA someday soon, you’ve got an interesting article about some sort of tax rule that you think might apply to you pinned up in the kitchen, or you’re interested in investing but don’t really know where to start. Sound familiar?

With the help of a qualified adviser, your finances will never be left to chance. You won’t have to do any of the heavy lifting, either.

Getting help doesn’t have to be a hassle

No doubt some people will put off speaking to an adviser because they never get round to setting up a call or a meeting with a financial adviser — or find the prospect of speaking to someone about your finances too daunting or draining a prospect.

Perhaps you might not want the inconvenience of meeting face-to-face with an adviser — your busy schedule means it’s almost impossible to find the time to actually sit down and talk about your finances.

But at the same time, many might find so-called ‘robo-advisers’ or online-only offerings a bridge too far, and prefer the reassurance of a qualified expert somewhere in the journey.

Luckily, technology could mean it’s possible to bring the best of both.

Here at Octopus Wealth, we’re on a mission to harness tech to make the advice process as convenient and seamless as possible — so that you can get the advice you need, on your terms.

There’s plenty more to do, but it’s an exciting journey ahead. So if you’ve been thinking about getting advice, but have been putting it off, why not join us for it? To find out what financial advice can do for you, book a meeting with one of our advisers today.

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