A financial adviser can assist people in making some of the most important financial decisions of their lives. This could be when:
- Beginning to save for a home
- When putting money away to save for a future child’s education
- When choosing a pension or consolidating existing pensions
- When approaching retirement age
- When seeking to generate the maximise income (with capped risk) during retirement
Financial advisers could also assist if you come into a large inheritance, such as after the loss of a parent. Often people don’t know where to start with investing the proceeds of a windfall they weren’t expecting.
When is the right time to get advice?
It’s perhaps easier to think about this topic initially by focusing on the wrong time to get financial advice.
Many people seek the services of an expert when:
- The stock market crashes and ruins the chances of meeting a financial goal
- An investment scheme turns out to be a scam or in a grey area with regards to the legality of its tax status with the local tax authorities.
While a financial adviser may be able to provide sound advice and encourage you to take positive actionable steps to protect your wealth in such situations; this is really akin to placing an expensive plaster on a wound you didn’t need to sustain in the first place.
The right time to find a financial adviser is when you are plotting your initial steps. Perhaps you understand your objectives; you know how much you want to save, or what lifestyle requirements you will have in the future.
This is the perfect moment to engage because the financial adviser can bring all of their experience in watching other people achieve those same goals, to ensure that your first steps are in the optimal direction.
Engaging with a financial adviser early means:
- No wasted effort
- Starting at full speed
- Having the confidence from the beginning that a financial plan is reasonably achievable and is safe to ‘trust’ when making other life decisions.
Long term goals
Another way to know the moment is right for advice is when you have a long term goal ahead of you. Financial advice is best suited to long term goals because it is difficult to recoup the costs of financial advice over a very short period.
For example, let’s say that with the help of a financial adviser your investments can expect to grow at an additional 3% per year. That’s a great premium, but what if the cost of advice is 5% of your initial savings pot?
In this case, even after two years of earning a premium return, you will have only just recovered the costs you spent upfront in obtaining the advice in the first place.
It’s therefore always worth weighing up the cost v benefit of financial advice in this way before committing to an adviser.
Don’t worry though – most firms will allow you to have a fairly lengthy initial consultation to allow both sides to assess whether advice would be the right course to take. It may be that after your initial discussion, you or your adviser decides that the cost of the service would be prohibitively expensive and would not be the best option for you.
That type of advice – when not to pay for it – is quite happily, completely free!