Whether you’re saving for your first home, investing in the stock market or trying to build your pension pot, taking financial advice from an expert and putting into practice the financial planning knowledge you gain, can significantly boost your assets.
Recent research has shown investors who take financial advice before investing their money made substantially more than those who invest on their own.
The research, by stockbroker Numis, showed that in recent years investors who used financial advice firm St. James’s Place achieved annual returns of between 0.5 and 2 per cent on average against the benchmark, after all fees and charges were deducted.
In comparison, investors who used an execution-only platform to invest their money themselves achieved average annual returns of significantly less – between -0.5 and 0.5 per cent against the benchmark.
The value of advice here is clear – investors who used an adviser saw their money grow faster, even when the additional costs of advice were factored in.
Of course, returns vary greatly based on the performance of underlying funds and are never guaranteed, whichever way you choose to invest.
But don’t be put off taking financial advice by the fees – the value of the advice can quickly outweigh the upfront and ongoing costs involved.
Five benefits of having a financial plan
As well as growing your money faster, having a tailored financial plan in place brings a number of other important advantages.
Sitting down with an adviser will make you think hard about what it is you want to achieve with your money beyond your Isa’s investment returns. Do you have dreams of buying a boat, paying your children’s university fees or retiring abroad? A financial planner will look at your overall goals and help you devise a realistic, achievable plan to turn them into a reality.
Whether you are the type to keep a close eye on your investments or you would rather simply invest and forget, taking advice from a professional means you will have annual reviews to keep track of your finances and progress towards your goals.
The benefits are twofold; first it allows you to adapt your plan as your situation and needs change, and it refocuses your mind on what it is you are trying to achieve and allows you to make changes if you don’t feel you are on the right course.
A good financial planner will make sure your money is working as hard for you as possible. This includes minimising your current and future tax liability. The UK’s tax system is complex and difficult to navigate. A small oversight could cost you hundreds of thousands of pounds in unnecessary tax. A financial adviser will be aware of the traps and will be able to make your finances as tax-efficient as possible.
There are seemingly endless investment and pension solutions available and each comes with their own rules, regulations and nuanced complexities. An adviser will do the time-consuming research for you and narrow down the range of investment options that are most suitable for you.
While you don’t have any guarantees that an investment your financial adviser recommends will perform as well as you hope, you are protected from misleading or poor advice. If inadequate advice causes you to suffer losses and your adviser refuses to put it right, you can refer your complaint to the Financial Ombudsman Service, which has the legal power to award compensation.
Ensure that your finances are where you want them with a high quality, tailored financial plan from the Telegraph’s Investment and Pensions Service.
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