Do I Need Financial Advice?

‘Do I need financial advice?’ is a common question asked by people when their circumstances change.

Most people are happy with their current savings and investment plan. It might be uncomplicated, it might be the same as it was three years ago, but it works.

Then, something changes. A large sum of money enters our lives, (or disappears through divorce or disaster). Families grow, and they break up. Businesses are formed, promotions are won, and houses are bought.

As we meander through life, we might be motivated by experiences, by status or simply follow what feels like ‘common sense’. But as we progress through our years, we tend to develop a more and more complicated financial situation.

This is because:

Our families grow, which increases the demand on our finances
We move into ever-larger properties, which increases our mortgage and bills
We get promoted or find better jobs which increases our income
We gradually build up a pot of savings (hopefully), which raises the stakes of our financial decisions.

In many ways, this happens naturally and without us really planning for it. The above is like an invisible path which many of us follow. But when is financial advice a luxury, versus when is it virtually essential to get a financial adviser? Let’s explore:

What is my knowledge level and experience level?

Ask yourself about your financial competency. Are you a newbie to saving and investing, or are you already a sophisticated investor?

This matters hugely, because the relative gap between the skill level of yourself and your adviser, translates into the value you will receive by engaging with them for advice. It goes without saying that if you’re already operating at a knowledge level close to a financial adviser, then the benefits of visiting them become more limited (although never underestimate the power of an independent second opinion).

If you’re a newbie, it’s likely that an adviser can fulfil several roles for you:

Help you understand your objectives and frame them in a simpler way that then gives a framework for individual steps.

Help you step back and look at other solutions you may have not considered which may help you achieve those objectives. For example, considering life insurance, which is often a cheaper and quicker way to achieve a measure of financial security for your family while you are saving.

Teach you a little about important investment concepts such as diversification and understanding your tolerance to risk.

Build an actionable set of steps to move you from your current position, to having an investment portfolio. This may include building your portfolio for you, and managing it pro-actively, or it could be limited to explaining what you should invest in.

How complicated is my financial situation?

The more complex your financial situation is, the more areas in which the adviser will be able to help, and the more need there is to get help in organised and rationalising your situation, then cutting through this with a coherent plan.

If you recognise any of the situations below, this will increase the complexity of your financial situation and make it more likely that yes you do need a financial adviser.

You rely upon income from a trust

You have complex wishes for what will happen to your estate when you die

You are wealthy, and will likely have to pay inheritance tax on your estate

You are willing to take risks but currently you only have simple savings accounts

You have large financial obligations which make it difficult to save money

Overall – Do I need financial advice

It’s your decision to make. No blog article will be able to tell you that you need financial advice. Financial advice isn’t cheap, but it’s a quality product. So it’s a matter of determining whether your circumstances, and your level of knowledge, would benefit from an expert giving you a strong sense of direction, a clear plan, and some expertise on what to invest in.