Why Use A Financial Advisor?

Written by Anthony Burgess (Pension & Investments) on January 30, 2019

Updated March 28, 2022

financial advisor with a married couple

Throughout your life, there will be several times where you will have to make big financial decisions that will affect your future. If you have little or no experience in managing your finances and investing your money, then it can be difficult to make these big decisions in a way that will benefit your future.

Many people believe that only the very rich require professional financial advice, but in reality, anyone can benefit from it. A financial advisor can help build and protect your assets and give you a helping hand in making the most from your investments. Financial advisors or financial planners can use their experience and knowledge to get your finances organised and assist you in planning for the future for you and your family.

If you are wondering what a financial advisor is and how they can help you, then read on for some vital information on financial advice and some top tips to help you decide what’s right for you.

What is a financial advisor?

There is an abundance of financial products available, and during your lifetime you are likely to need various different products for a range of reasons. A financial advisor is an experienced professional that will have a large amount of knowledge on the financial products available, and they can help you to identify your options and advise you which is best for your individual situation.

Using a financial advisor is not free and will have a cost involved. However, this can be worth paying for in order to get your finances in order. Many financial products are complex, and even a wealth of research can still leave the most money-savvy individual confused, and this is where a financial advisor can help.

Financial advisors come as two different types, and it is important that you understand the difference:

1. Independent Financial Advisers (IFAs): These types of financial advisors are able to sell and advise any product from any provider in the market. As the name suggests, they are completely independent and can offer the very best advice and recommend products that are tailored specifically to you.

2. Restricted advisers: Some financial advisors are restricted, and this means they can only recommend certain products or providers. If there are other products out there that might be better suited to your needs, then these advisors will not be able to provide you with any information on these as they must only use specific providers and products.

If you want to seek financial advice, it is recommended to choose an IFA as you know you will be getting the best products and options for you. If you are unsure if an advisor is restricted or independent, then be sure to ask.

When should I use a financial advisor?

There are various situations where seeking financial advice can be worthwhile, and often if you are looking at any kind if complex financial products then financial advice is worth considering. The main products that financial advisors can help with are:

  • Mortgages and equity: Buying a home or managing your mortgage is a huge financial transaction, quite often one of the biggest in your life. Getting a financial advisor can help you to make the best decision for your situation.
  • Finance and tax planning: The more assets and funds you have, the more complicated it can be managing them all. There are various financial products available that are useful for managing your finances and taxes, however, they are often complex. An IFA can help to find the best options for you.
  • Annuities: Annuities are financial products that you can trade your pension in for once you reach retirement age. They provide a regular income for the rest of your life but choosing one can be a difficult decision, and there are a lot of parts to consider.
  • Pensions and pension transfers: Pensions are never a straightforward subject and choosing the right one or transferring an existing pension can be complicated. An IFA can help you to get the most out of your retirement funds.

Financial advisor fees work in one of two ways; you will either pay them a fixed cost upfront, or a commission amount depending on the finance product. It is a legal requirement that an IFA gives you both of these payment options.

Why use a financial advisor?

There are a range of benefits to seeking professional financial advice, and it is important to properly understand them before deciding if it is the right choice for your financial situation. The main advantages of seeking professional financial advice are:

  • Tailored solutions: They will provide you with a range of financial solutions that are specifically tailored to your needs.
  • Industry knowledge: They will have an in-depth understanding of how various complex financial products work and how they could benefit you.
  • Certified professionals: Financial advisors are required to be qualified to offer financial advice.
  • Exclusive products: Some financial advisors will be able to provide financial products that are exclusively available via intermediaries.
  • Protection: when you use a financial advisor, you are protected if things do go wrong because you have been given poor advice or misleading information.

While you can complain to a financial advisor if they have given bad advice, you cannot complain if an investment you signed up to doesn’t perform as well as you had initially hoped.

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