The biggest question you will have before seeking financial advice will be how much does it cost?
Looking back through history, the industry was predominately built on commission which creates a lucrative sales environment. Now post RDR, commission is gone when it comes to pensions and investments resulting in advisers charging for their time. This I believe results in better practice and more focus on the advice and service.
However when it comes to fees, the fee itself will still typically be associated to asset value. The justification relates to the levies from the FCA for rights to give advice and PI to cover financial advice given. As the risks reflect the asset value the cost to advising firm will be based on this.
That’s not to say there’s a variance between firms! Actually recent statistics shows quite a difference. When given financial advice, the adviser would either be restricted (limited on what products he can advise on) or whole of market (independent). Surprisingly restricted advice has come out on average as more expensive despite ones conclusion that you would pay more for an independent view. On average initial fees for restricted advice was between 4-5% whereas independent advice was 3%.
The question is does this represent value? This is where you need to probe your adviser! What will you do? Why? What will this achieve? How will this help me? Only once you’ve understood what the adviser has done can you make an informed decision on whether it’s worth it. I appreciate some work requires you to seek advice for instance certain pension transfers but that’s not to say you can’t seek value in what your adviser is doing!
The other subject is ongoing fees. Seeking financial advice will commonly result in an initial fee to put you into your desired position. The next part is to keep you there. Whether that’s managing the funds, tax liability, utilising allowances or just regular reviews to assist with other matters. This all naturally comes at a cost. Again typically it will be a percentage related to the funds being looked after as this relays to the expense incurred by the firm. Again stats show on average this ranges from 0.5% to 1%.
So should I seek financial advice?
In addition to all the above you also need to account for a few other points. Seeking advice from a regulated financial planner means you are protected under the FOS meaning of ever that advice was deemed unsuitable or not in your best interest you could be entitled to compensation. Most thing you could potentially achieve yourself it’s whether you want the peace of mind it’s being done properly. Your adviser will most likely be able to access providers, funds, strategies and software that isn’t freely open to the public which again may benefit your situation.
So is it worth the cost?
That’s for you to decide but you can only do this by seeking financial advice in the first place! Most advisers will be happy to give you an initial meeting at no cost to understand your objectives and to see if they can even help. At this point they would have a good idea on potential costs.