Am I the wrong person to ask? Perhaps! I might be biased and of course you would expect me to say “Yes, you do!” But maybe you don’t. What I’ll try to explain here is why you might need one and what you can expect.
Fees: Many people think financial advice is out of reach and far too expensive for ordinary people. This is not true. The first thing you can expect is a free initial consultation. This initial consultation is typically exploratory, where your financial adviser wold do his best to get a comprehensive picture of your financial circumstances.
Some advisers may offer you a free financial health check, where after gathering information about your circumstances, they will give you a breakdown of where they feel there may be shortcomings in your financial planning. It is only when they start doing chargeable work that fees would apply. For example, in writing a report summarising your financial position or in setting up a plan for you. Most advisers would charge an hourly rate or a percentage of what you invested and this would all be discussed and agreed before they started any chargeable work.
Many difficult questions: Expect to be asked some difficult questions.
For example, if you had a family, your adviser would be sure to ask how your family would survive if you died. Or as a non-working Mum, whether you would you be able to get by financially if your husband died last night.
Or what would happen if you were unable to work due to accident or illness? What about if you suffered a critical illness? How would you cope financially if you were out of work for say two years?
Your adviser would want to know what rate were you paying on your mortgage and whether you could get a better deal? What about other debts? Do you have any? What is the interest rate? Should you be paying them off? What is left after you’ve paid all your bills at the end of the month? Is there a surplus? What are you doing with it? Perhaps there is a deficit. What can be done to change that?
How much money would you need to live on in retirement? Do you have a target? Are you on track? If not, what are you doing about it?
What about your savings? What return are you getting? Could you do better? Are you paying unnecessary tax on your savings? Are you expecting an inheritance? Have your parents done any estate planning? What about you? What taxes would have to be paid if you died? Have you made a Will?
A financial plan: After all these difficult questions, your financial adviser should be able to put a financial plan in place to plug any gaps in your finances. Your adviser probably won’t tell you much that you don’t know already. But hearing it from someone else, someone who is objective and can see you with fresh eyes can be invaluable.
Typically, you would end up with a summary of recommendations. And your adviser would ask you to prioritise what needs to be done sooner rather than later. The relationship wouldn’t end there. Your financial adviser should arrange to have a discussion with you every so often to help ensure that your plan evolves with you as your life progresses. Your priorities may change. Your circumstances may develop. And your financial plan must change, develop and evolve around you.
Personally, I think financial advice is worth every penny and can change your life for the better. But then again, I would say that wouldn’t I? I am the wrong person to ask!
