In the Annuity Marketplace – Do you Need a Financial Advisor?
The financial world can be a confusing place and most people’s knowledge of it doesn’t extend beyond a balance on a cash machine. However, there are times in life when you will be required to make important, long lasting financial decisions.
Depending on how complicated your personal circumstances are you may need to seek the help of a financial advisor to help assess your long and short term financial goals. With their knowledge and experience they are then able to recommend financial products and services which are both suitable and affordable.
But like the products available to you, financial advisors are a mixed bag. Some will offer a broad range of services including, but not limited to, investment advice and financial planning whereas others will be more specialised and deal with a certain field, for example pension annuities and income drawdown rates.
Ultimately, you can be confident that any advice you follow will lead to a sound financial decision. In addition, while consulting a financial advisor you will have more access to various financial products and services than you could normally on your own, many you may not even be aware existed. Furthermore, if the advisor should end up giving you poor advice, you have more protection than if you had purchased based on information. For example, if you are dealing with a building society or a broker they will talk you through every available option and leave the decision to you, in this scenario you have less of a claim to compensation should your investment or product go sour.
Alternatively, if you take the advice or recommendation of a financial advisor you may have a case for mis-selling. Bear in mind however, that this does not protect you from fickle markets where prices and rates change daily.
So, what does a financial advisor charge for his or her services? Previously, most advisors received a commission which was deducted from a client’s investment payments, however, as of December 2012 the rules regarding fees for financial advice changed. For general financial planning or for advice on particular investments then there will be a fee involved, but, advisors have to be upfront with how much they will charge for their services and agree with you ahead of time how said monies will be reimbursed. This way, the advisor will not be influenced by how much they could potentially earn from your investment. Also, it is also common practice these days for a financial advisor to offer a first consultation for free so you can get an idea of their services and knowledge.
Ultimately though you can procure investments and services without an advisor there are a number of specialist and unique products which are only available to those who go through an advisor. Essentially, you are weighing up the initial fee against how likely it is you will make long term financial gains without the advice.
So when do you definitely need to invest in a financial advisor? For certain things, like ISAs and various trusts, you can do these by yourself through your bank or building society. In fact it is probably more logical to do so; if you are a long standing member you will certainly enjoy increased rates or lower start up fees. The same can be said for insurance and mortgages. There are many comparison services available and it is likely you could find a good deal with or without specialised advice.
When it comes to investments this is really a question of whether you have the free time to do the necessary research in order to find a solid investment. In addition, investments are often harder to understand to beginners and the risk of losing funds is considerably higher. It is recommended to seek financial advice if you wish to enter the world of investments; you must also be patient and prepared to deal with the financial but also the emotional cost of failure.
In regards to pensions and annuities it depends on your personal preference. There are many providers who can offer a fair pension or annuity quote, and they will be able to talk you through the differences between capped and flexible drawdown. However a specialist advisor, as mentioned, may well have access to knowledge, experience and plans which may suit you better.
Whether you choose to consult a financial advisor or to trust your instincts when it comes to your finances be sure not to make any rash decisions. As they say, don’t spend it all at once.
Share this:
Category: Annuity
