Why it pays to pay for financial advice

Why it pays to pay for financial advice

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Lee Dooley
Published: 07 Aug 2017 Updated: 13 Jun 2022

It is shocking how often we hear people say that they get their financial advice from an unqualified friend. No matter how well-meaning their intentions are, unless they are a qualified financial adviser, you cannot be sure that you are getting the best possible advice. To put it another way, you wouldn’t ask a friend to remove a tooth or wire your home unless they were a qualified professional. So why is it, when it comes to future finances, people shun professional advice and go with what their friends say?

What is a financial adviser?

In a nutshell, a qualified financial adviser is an individual whose job it is to get the most out of your finances and is regulated by the Financial Conduct Authority. What services they provide and which areas they specialise in often vary between firms and even between individual advisers.

Why cheaper isn’t necessarily better

It is probably safe to assume that people take financial advice from friends rather than a professional because of the costs associated. While your friend is unlikely to charge you, you could potentially be losing out on more than just the adviser’s fee. A recent report called The Value of Financial Advice*, published by the International Longevity Centre and Royal London, showed that on average, the people surveyed who received professional financial advice between 2001 and 2007 accumulated approximately £41,000 more than those who did not:

“Once customers realise that the benefits are likely to outweigh the costs, then advice will no longer be seen as expensive.” - The Value of Financial Advice

Think about the role of architect. You can design the layout of your house yourself but if you hire a good architect, they are likely to get you more space and a better layout – that’s what they’re trained to do. It’s exactly the same when it comes to financial advice. While you may have a good idea of what will and won’t work well, only a professional has the specialist knowledge to help you maximise your finances.

How can we help you?

At Tilney, our advisers spend their days helping people to achieve their goals. No two clients are the same – our service is personal.

You may need advice on a one-off basis for a specific goal such as planning for retirement or managing Inheritance Tax. For more complex needs we can create a full financial plan that covers all areas of your finances. Our advisers take every aspect of your finances into consideration, including your tax situation, to understand how advice in one area might have an impact on others.

They are specialists in many areas including pensions and retirement, estate planning and Inheritance Tax, long-term care, saving for children plus many more. Their specialist knowledge means they know all the fine details of tax and pension legislation and what you can and can’t do to make the most of your money.

This is particularly evident when it comes to pensions and retirement planning. According to The Value of Financial Advice, from 2012-14, the average pension value of those surveyed who had not received financial advice between 2001 and 2007 was £149,814, compared to the £177,471 belonging to advised individuals. That is a staggering difference of £27,657 – an amount unlikely to be outweighed by any fees. What would you do with this extra money?

Our fees

There is no charge for your first conversation with an adviser and we always agree all fees in writing before starting work together. Fees are usually based on the complexity of the advice that you require and whether we are advising you on a specific area or your overall finances. Our fees may also be based on a percentage of the value of assets that you need advising on or an hourly rate.

Contrary to popular belief, advisers are no longer paid commission on any products they sell to you. This practice was stopped in 2012, meaning you will always be charged a fee for financial advice.

What next?

The research makes it clear that the benefits of receiving professional advice are likely to outweigh the costs:

“Our results show that those who take advice are likely to accumulate more financial and pension wealth, supported by increased saving and investing in equity assets, while those in retirement are likely to have more income, particularly at older ages.” - The Value of Financial Advice*

To find out what our advisers could do for you, please book a no-obligation consultation by completing this online form, calling us on 020 7189 2400 or emailing contact@tilney.co.uk.

Alternatively, to find out more about our financial planning service and the specific areas our advisers can help you with, download our guide.

* The full report can be found here.


This article was previously published on Tilney prior to the launch of Evelyn Partners.