/ Money

Should I get financial advice?

A bad financial decision could be a costly mistake to make. So for those complex choices it can be worth seeking good advice. But not everyone does. So have you ever thought about financial advice before?

It might not be a million dollar question, but most people at some point in their life will need some help when making a financial decision.

For the more straightforward choices – taking out insurance or choosing a bank account, you might use free sources of information to make your decision. But what about buying a house? Or deciding how to access your pension?

The government and financial regulator (FCA) are exploring how to make the financial advice sector work better for you. Much has been made of the “advice gap” where people who want or need advice can’t get it. But we’re interested to know what improvements you think are needed.

Trust in financial advice

Paying for financial advice could be one of the best investments you make, but many people don’t trust independent financial advisers and think they’re too expensive.

Our research shows the average amount people say they’d be willing to pay for advice on investing £60,000 is around £260, but this is more likely to cost around £1,450.

As Carolyn from Hartlepool told us:

‘I want to know I will be able to live comfortably in my later life. Not having to choose between food and heating. I want to know that I can trust advice I am given is going to be the best for me, not in the best interest of the financial advisers.’

Possible solutions

We agree that more needs to be done to bring down the high cost of advice. And there are already some providers offering online advice at a cost much closer to what people are happy to pay. We’re calling for the FCA to focus on making it easier for industry to create new ways to give advice, without reducing consumer protection, as this should reduce costs significantly.

We also think the FCA should consider requiring firms selling certain products to give people better information and risk warnings so they can assess the suitability of their own decisions.

A return to commission?

Worryingly, in recent weeks, it’s been revealed that the regulator is considering allowing commission-based sales of financial products, arguing that it’s simply the high upfront cost that puts people off getting advice.

We’ll be pushing back strongly against this as we’re concerned that it could be a return to the days when commission was hidden and mis-selling was incentivised. The Financial Advice Market Review will make its recommendations in time for the Budget in March, and we’ll be keeping a close eye on this.

So what we’d like to know is what do you think the solutions should focus on? Have you sought financial advice before, did you find it easily accessible?

Have you taken professional financial advice before?

Yes I have (55%, 755 Votes)

No, I've never sought financial advice before (40%, 544 Votes)

No, I've sought advice before but I haven't taken it (5%, 70 Votes)

Total Voters: 1,369

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I keep abreast of financial affairs and do my own fund investments via Hargreaves Lansdown. Even so I would be prepared to get good quality specific advice to ensure I am preparing for retirement in the best way possible. I just don’t trust such advisors and I balk at paying such inflated fees.
It especially bugs me that the fee is a % of my investment. Surely the advice is fixed and the effort to give it constrained, so why does the cost have to be so high. Hundreds of pounds is fair but thousands is not.
I realise the advisor has undergone exams and has costs, but still I’ll not pay for advice I personally feel will differ little from what I have worked out myself.

I could not agree more with the sentiment that the “financial adviser” concept has facilitated a whole new class of shallow, self-absorbed, self-interested crooks within the “financial services” sector. I am a trained chartered accountant (PWC) & find the whole industry corrupt & devoid of any integrity.

I have an ongoing relationship with a firm of financial advisers who deal with investments, ISAs, SIPP and charge for this. An initial financial assessment face to face several years ago in our own house, and a later one at their offices, were not expensive. Their charges now come from fees paid on the value of the assets they look after.

I would not have known what investments to choose to be, say, medium risk and produce a reasonable income. I would not have wanted to set up my own SIPP. I consider that if you don’t understand something, then either don’t do it, or seek professional help. It will cost you money up front but I believe it will be repaid many times over in the longer term.

My children have sought professional advice for mortgages, paid a fee and had sensible advice and outcomes.

We should not be stingy about paying for a service that should benefit us financially. I suppose finding a reliable financial adviser, like any other professional, is the initial obstacle. I don’t think on-line is a good method; face to face question, answer and assessment of the person involved is valuable. Which? have Trusted Traders ; perhaps they could launch Trusted Financial Advisors?

One thing to avoid are commission-based payments in my view. It does not mean necessarily that you will be recommended to a product that rewards the FA the most, but that would always be a concern at the back of my mind.

There is a lot of mystique about investing money and you will not be surprised that there is a large number of people who benefit from saying how complex it is. The short answer is invest in low cost tracker funds and not focussed on the Footsie 100.

I am not alone in doubting the value of “the professionals”.

You also ought to consider how much advertising and column inches investment chat provides to the print media. Armed with a cynical view you are now well prepared to start looking at what investments are available.

You will appreciate that I am not a registered finacial adviser though I did have a lot of training in the subject even down to the amounts of commission on various Bonds sold, and the the annual taregts for salespeople.

Therefore my view is jaundiced and of course I probably have more finacial savvy than the majority of the population. Given Which’s claims from its survey on comprehension of no interest credit card transfers there are serious doubts on the UK population’s numeracy skill and comprehension. Or possibly the value of that survey.

The vast majority of the population will not have vast amounts of free cash to invest so investment strategy choice is limited and generally should be very conservative indeed. Unfortunately this is also an area where promises to really make a small pot of money really work are highly attractive to the unwary.

This can be seen by the scandals on storage lockers, wine frauds, and carbon credit frauds. I do wonder if, given the authorities are happy to let anyone set up a company and then later respond to complaints , that Which? does not actively look at new offerings by new firms.

A simple Wikipedia interface, the name of the firm, any bio on the company Directors …etc. One need not even really say anything libellious : ). Perhaps Which? do but you need to subscribe to Money Which?

I have a friend , now deceased, who invested in a carbon credits firm and lost £18,000. Financially numerate he was completely gulled . When he told me a month after he sent of his cheque that he was having qualms a quick look at the site and the City of London address made me quite certain he had been suckered. And like many he was too embarrassed about making a fuss.

The SFO or Serious Farce Office as was had a bad name for not doing anything as can be seen from this financial advisers blog:

* it should be noted I have made and lost money by investing in shares over the last 25years and I am currently down a significant amount due to investing in AIM shares which are high risk and currently low priced. The flipside is that due to imminent pensions this loss will not make me poverty stricken. And I always knew this. I certainly would have done very much better by investing in a tracker fund each year and forgetting about it.

Self-feeding frenzy within the industry & industry-related media who are all scratching each others’ backs. None of them are trust-worthy. Even the better ones might be “useful” at best such a some “platforms” but only with great reservations. No substitute for educating yourself. Reputable unit-trust fund -managers (collective investments) are best for those who do not want to expose themselves to individual stock-picking minefield. Insurance-company pensions are a complete travesty of incompetents! SIPP every time with a reputable collective fund-manager every time!

James says:
31 January 2016

I paid for advise from a well known firm and am very disappointed with the service. The advisor was suppose to advise me on action with my pension funds, he forgot to come back to me last year. When i contacted them he came to see me apologised for not coming back to me, then said to wait until October 2015 because rules would change then he would contact me again. I am still waiting, I have no confidence in this firm and am considering contacting another IFA but after my initial outlay I am really need to know that I can trust them.