“I really should have spoken to someone”

How often have you heard these words, usually spoken forlornly by a friend, family member or colleague who has suffered a financial loss?

The reality is that far too many people don’t ask. They are “too busy” or “don’t need help” – if this resonates with you and you haven’t spoken to a financial advisor about your affairs, then please keep reading.

Why do I need advice?

If you were building a new house, would you use a professional architect and a reputable building company, or would you cut corners and perhaps even break the rules while trying to save money, resulting in an expensive mistake to rectify?

If you were servicing your beautiful new car, would you take it to a proper workshop or hand it over to a side-of-the-road operator with two spanners and a makeshift sign advertising oil changes?

Then why do you do this with your money?

The benefit of expertise, experience and empathy

A great financial advisor brings a few critical things to the table.

The first is expertise. 

Clearly, any advisor needs to be an expert in the field. A strong technical knowledge is a ticket to the game. I’ve seen situations where poor estate planning results in totally unnecessary tax leakage, thereby giving 20% of someone’s lifetime wealth to the government purely because mistakes were made in the planning and execution of the estate.

The second is experience.

This is a crucial layer on top of a theoretical foundation. Not only should an advisor know what the right approach should be; an advisor should have experience in solving problems and seeing where and how everything can go wrong. I’ve seen the significant negative impact of excessive fees and poor asset allocation on retirement savings. A 2% reduction in annual returns due to excessive fees can reduce the capital available at retirement by as much as 35%.

The third is the human touch, practiced through empathy.

It isn’t practical, nor could it ever be correct, to try and save every cent you have. We all want to get out there and experience the world, not least of all once lockdowns become a distant and painful memory! Empathy is important when building lifestyle desires into a broader financial plan. I am passionate about my interests beyond my career and I appreciate the need to live a full life.

The correct recipe with these ingredients can make all the difference in delivering your financial plan and lifestyle dreams. Entrusting a financial advisor to help you also avoids you holding back your lifestyle and your retirement potential through lack of confidence.

Most people struggle to make a choice from a restaurant menu. The world of investment opportunities is far broader than that and can be daunting, often leading to an overly conservative approach.

Conservatism, which isn’t always appropriate, can make your bank rich if you stash everything away into money market accounts for your entire life. There are smarter ways to manage your risk and achieve better returns. See article Under your mattress is not an investment strategy.

Seek out objectivity

Removing emotion from the decision is one of the single most important benefits of speaking to a professional advisor. By following an objective approach, the likelihood of a higher-quality decision and outcome increases exponentially.

Emotion clouds our judgement. Complex family and business relationships can quickly become a source of emotional difficulty. I cannot stress this enough: avoid making emotional decisions when it comes to your wealth.

You do your job and I’ll do mine

I never discourage clients from improving their financial acumen.

However, the concept of “return on effort” must be considered here. It takes years of experience to become an expert in anything. To get up that curve part-time, while trying to build wealth and maintain balance in life, is extremely difficult.

A bespoke financial plan could give you the flexibility to take control over a portion of your wealth, while ensuring that the rest is tucked away safely in a suitable investment strategy. Without a carefully considered plan, a well-intentioned move to take control of your wealth could end in disaster.

Ultimately, my job is to ensure that the fruits of your hard work can be enjoyed throughout your retirement and by your loved ones that you will one day leave behind. By all means, play an active role in your wealth and financial plan, but at least give yourself the peace of mind of involving an expert.