Is using a Financial Adviser worth it?
To meet your life goals and ambitions, mapping your financial journey is extremely important: the decisions you make today regarding your finances are likely to have a significant impact on the life you live in the future.
The basic premise of this statement is rarely argued, but how you go about achieving it often is.
And it all boils down to one simple question: is there a quantifiable benefit in working with a financial adviser, or could you achieve a similar result on your own and save yourself the fees in the process?
We think the case for using an adviser is a compelling one, and here are the reasons why.
Studies on value
There have been numerous studies undertaken that quantify the benefits of working in conjunction with a Financial Planner.
One of the major studies on this subject was revised in 2020 by Vanguard and showed that working with an adviser materially changed equity risk-taking for two thirds of investors, it gave 8 in 10 a greater probability of achieving a secure retirement and, most interestingly of all, found that the financial peace of mind that comes with working with an adviser, justified nearly 50% of the cost as far as the investors were concerned.
Other research suggests a possible improvement in net monetary returns of upwards of 3% per annum when all areas of financial planning are brought together.
The areas enhancing overall returns are many and various.
Appropriate asset allocation
Asset allocation means making sure that your money is spread across a suitable range of investments to allow you to meet your goals and objectives, fundamentally: the opportunity to live the life you have been striving for.
As your adviser, we will create a bespoke arrangement of investments aligned to your attitude to risk and capacity for loss. Your values are important to us too and, if appropriate, we can construct portfolios that look to drive positive societal change by utilising funds that put environmental, social and governance (ESG) concerns at the forefront of their investment processes.
Your portfolio should be geared to achieving the highest effective return from a defined level of risk. In industry terms, we call this ‘operating on the efficient investment frontier’. You might call it being able to sleep at night!
Building your portfolio is one thing, but managing it to make sure it remains within acceptable risk parameters while maintaining performance is entirely another. The rebalancing of funds within portfolios is crucial to keeping risk and potential reward in equilibrium. We will periodically rebalance your portfolio to maintain its starting objective and if at any point you wish to alter your attitude to risk, this can be accommodated relatively seamlessly.
Behavioural coaching is a very important part of the process
“Money has little to do with how smart you are and a lot to do with how you behave”.
Managing your own behaviour and instincts is a large part of how you avoid panic decisions, investment crazes, scams or simply bad investment calls.
Making the wrong decision at the wrong time can have a dramatic impact on your finances and the lifestyle that comes with them. There may be different ways to scratch an itch and, by having us in your corner as a consistent sounding board, we can be the vital second opinion that steers you away from the rocks of an impulse that you may never recover from.
Rather than overnight success, we much prefer the route of getting rich slowly and safely. This is the principle that “time in the market” rather than “timing the market” is key to investing. Trying to outwit the market in the short term, given all its volatility and sentiment, is virtually impossible in our view.
There will come a point when the time for net saving ends and the time to spend and enjoy the money you have accumulated starts. The timing of this will be incorporated in your overall financial plan and embedded within a lifetime cash flow analysis that we will prepare for you.
We will help you identify the investments that would be most accessible when withdrawing funds and advise on the most suitable order for the money to be taken. This is especially relevant for the interaction of Final Salary pensions and Money Purchase arrangements.
Tax allowances and asset location
How your money is put into and taken out of pensions, ISAs, Shares or Unit Trusts, and possibly property, will affect how they are treated for tax. As qualified and regulated financial advisers, we factor this in when creating your financial plan and, in so doing, help you maximise your allowances and avoid tax eroding the money you had planned to live on. You need everything positioned so you can take the funds you want.
Which brings us back to the question of cost.
Fees and costs can hit a portfolio from many angles and can, undeniably, have a major bearing on overall returns. Fund management costs, platform fees and adviser charges all add up. Even if you manage your portfolio yourself, it is unlikely that you will avoid costs altogether.
In anything you do, it is important to make sure that you understand the cost and impact of fees. The vehicles that you use need to be both competitively priced within the market and provide excellent functionality. Here at Panoramic Wealth Management, we have a broad knowledge of what is available and are required by law to set out all the costs extremely clearly. We are partnered with various trusted and award-winning platforms, allowing us to select the one that is most suitable for you.
QED, case closed!
So, in summary, yes, you might be able to do it all yourself, but the question is do you want to? Our role as your Financial Planner is to allow you to enjoy your life stress free, confident in the knowledge that you have a plan of action in place and it is being executed impeccably.
By working closely with you as our client, we can oversee the whole picture when it comes to your life and your finances. Through a combination of experience and the use of leading-edge investment and planning tools, we can plan the route to get you from where you are today, to where you strive to be in the future, and you can relax.
Yes, we charge fees, but as our many satisfied clients will testify - we are worth it!
Vanguard, 2020, The value of advice: Assessing the role of emotions (https://pressroom.vanguard.com/nonindexed/The-value-of-advice-assessing-the-role-of-emotion.pdf)