Should I pay for financial advice? – Birmingham Post article 19.12.2019

Given the amount of choice available today, financial decision-making has arguably never been harder.
Do you have the time and expertise or might it be better to seek financial advice?
Financial website This Is Money noted: “There will be times in your life when you’re not sure what to do with your money or what decisions you need to make to protect your financial future.
“Trouble is, many people can be unsure about the quality of advice on offer or whether advisers have their best interests at heart, while others are sceptical of whether it’s worth paying for advice.”
But, it insists: “In the long run, a good financial adviser will justify their fee by making you a wealthier individual than if you opted to go it alone.”
A 2017 ILC-UK research report for Royal London admits: “Much of the academic literature has argued that, in certain cases, consumers who receive financial advice do not fare much better than those who do not.”
The challenge is stark. “Across the developed world, there is widespread evidence of people failing to plan and save for retirement, failing to participate in the stock market, failing to diversify appropriately and failing to shop around for the best financial products. As a result of poor decision making as well as inertia in the face of complex financial decisions, many attain a standard of living in retirement which is significantly lower than it could have been had they invested and planned better.”
Only 16.8 per cent of people saw an adviser in the years 2012-2014.
Analysing an “affluent but advised” group and a “just getting by but advised” group during the period 2001-2007, and subsequent consumer outcomes for 2012-14, the report maintains that financial advice benefits both the wealthy and the less wealthy.
It stated: “The ‘affluent but advised’ group accumulated on average £12,363 (or 17 per cent) more in liquid financial assets than the equivalent non-advised group, and £30,882 (or 16 per cent) more in pension wealth. The ‘just getting by but advised’ group accumulated on average £14,036 (or 39 per cent) more in liquid financial assets than the equivalent non-advised group, and £25,859 (or 21 per cent) more in pension wealth.”
Nine in ten people were satisfied with the advice received with the vast majority deciding to go with their adviser’s recommendation.
This is Money highlights scenarios where financial decision-making is particularly tasking – getting married and having children, receiving an inheritance, approaching retirement and leaving a legacy.
Taking ‘receiving an inheritance’ as an example, it states: “Receiving a cash windfall through inheritance can transform your financial circumstances. But knowing what to do with a lump sum can be daunting.
“Those who choose to go it alone need to understand investment risk, the importance of having a well-diversified portfolio and have the ability to manage these factors over time.”
Similarly, Aegon focuses on staying invested, divorce, long term care and death.
It said: “An adviser can guide you through unstable times and could help prevent potential losses.
“Divorce – this is a very difficult time both emotionally and financially. Having a financial expert to provide clarity and help you make the right decisions about your money is key.
“Long term care – an adviser can help you make sure you and your finances are taken care of in the most tax efficient manner to finance the best health and support services in old age.
“Death – an adviser can help ensure that wealth is passed down to future generations in the most tax efficient way.”
And, adds Aegon, how do you put a price on peace of mind?