6 reasons to use a financial adviser

Looking for reasons to choose a financial adviser? Here are 6 of the best.

1. A financial adviser helps you choose the right mix of investments

Should you invest in shares or bonds? Where in the world should your investments be? How ought you allocate your assets to give you the best chance of reaching your goals while reducing the risks?

Imagine the time it would take to shop around and make all those decisions yourself! It’s your adviser’s job to keep up with what’s going on, and make the best recommendations for you. They do this all the time.

If you believe in paying an expert to bake your bread or cut your hair, it makes sense to pay an expert to advise about financial decision-making.

2. A financial adviser helps keep your portfolio on track

You know how fast things change. As a result, the markets are always going up and down. Your financial adviser will ensure your portfolio remains balanced by recommending adjustments – this should happen at least once a year.

It’s a bit like driving a car from Land’s End to John O’Groats. You start out with a map and plan, but if you hit traffic jams or roadworks, or you find a clear shortcut along the way, you’d make a diversion while still aiming for the same destination.

3. A financial adviser will save you money

Research shows that low-cost funds outperform the rest most consistently over time. Your financial adviser will recommend high quality funds that cost you less, so you end up with more money to keep.

You want as much as possible to stay in your pocket, not trickling away into the pockets of expensive fund managers.

4. A financial adviser helps keep emotion out of it

Individual investors tend to be swayed by emotion. They panic when they read the hyperbole in the media. They feel inclined to sell when markets drop, and are tempted to buy when markets rise.

To generate the best return, the opposite is true. Your financial adviser will remain objective, encouraging you to ignore the hype, stay invested for the long-term, buy when prices are low and sell when they rise.

5. A financial adviser helps minimise tax

Let’s face it, you don’t know what you don’t know. And why should you bother to learn all about tax when you can trust your financial adviser instead?

Financial advisers know about ISAs, SIPPs, and other tax-efficient schemes to help (legally) reduce the amount of your hard-earned cash that you have to pass to the tax office.

6. A financial adviser helps you drawdown your cash

At some point, you’ll stop earning and start living off your investments. To keep as much as possible ‘in the pot’ for a secure future, you have three choices:

  • Spend less (you probably don’t want to do that)
  • Move your investments into funds with a higher yield and increase risk at the same time (you probably don’t want to do that either)
  • Spend from ‘total return’ which includes capital and income (it sounds a bit technical, but this approach avoids the need for you to invest in high-risk assets)

When it’s time to stop saving and start spending, your adviser will devise a drawdown strategy that gives you access to the money you need but also protects your remaining portfolio and saves tax.

Lance Baron

Certified Financial Planner (CFP) based in East Sussex, UK. We support people in Southeast England with more than £500K to invest by building a financial plan that will help them live the life they want… until age 100