Howard Goodship, CFP, Ringwood - The Value of Independent Financial Advice

Wednesday 4 September, 2019

Howard Goodship, chartered financial planner and member of the Ringwood financial planning team has written his ninth article in a series on Understanding Investments.  To read other articles in the Understanding Investments series please see the articles below or visit our New to Investing web page.

Understanding Investment Articles

1 What are Investments and why should you own them?

2 Managing risk and tax to earn a higher return.

3 Fees, costs and value.

4 Tax efficient investment income.

5 What are my pre-retirement options

6 What are your choices at retirement

7 How much money do you need in retirement?

8 Tax efficient saving for grandchildren
 

An Actuarial Report produced by The International Longevity Centre-UK (ILC-UK), supported by Royal London found that those who received financial advice in the 2001-2007 period had accumulated significantly more liquid assets and personal wealth than their unadvised equivalent by 2012-2014.

So, receiving financial advice can more than pay for itself, and good financial advisers will only take on a client if they believe they can “add-value” and help that client achieve their objectives.

But what are the differences in the financial advice available, and why not do it yourself?

Information on financial advice:

There are plenty of informative websites from which to obtain background information. These can certainly help you prepare to ask the right questions and enable you to better understand what you require. Examples include;

The Money Advice Service

Pension Wise

The Pensions Advisory Service

Citizens Advice 

To keep things in perspective though, please remember these are free services. I am reminded of a story about someone who complained to a newspaper that one of the paper’s share tips didn’t go as planned and the reader lost money. The paper’s response was “what do you expect for 30p” (the price of the publication at the time!).

DIY Investing

You may be tempted to set up your own investment portfolio. This can save the cost of paying a financial adviser and for some suitably experienced and well qualified individuals, may be appropriate. But remember the saying “a little knowledge is a dangerous thing”.  In good markets DIY investing becomes even more popular as almost all investments appear to rise with the “strong tide”. In our experience, it’s when “the tide goes out” and markets fall that poor- quality investments become exposed and inexperienced investors realise the folly of their choices. 

Independent Financial Advice or Restricted Financial Advice?

Independent Financial Advisers (IFAs) make independent recommendations based on the entire market. Restricted Financial Advisers are either limited in the type of products they cover, for example can only advise on pensions, or more commonly can only offer products from a narrow panel of providers.

The restricted financial advice model has further evolved so many of the big national financial advice firms are now “vertically integrated”, which means their financial advisers can only recommend investment funds and solutions provided and run by the same firm. This is highly profitable for the firms as the financial advisers are paid by their clients and in addition, the company also take a fee for running the investments. 

IFAs are able to select investments from the entire market without bias and any earned fees are paid directly by the consumer/client. Due to the breadth of choice in the market, it is critical that Independent Financial Advisers have the resources to conduct proper and full due diligence on any investment solutions they recommend. Providing they do this, they should be able to select the best of the best and act as the “informed buyer” on behalf of their clients. They are not remunerated by any of the investment providers.

Whilst you would probably expect me to advocate the benefits of Independent Financial Advice, since Lonsdale Wealth Management are Independent Financial Advisers, this is supported by two well respected professional organisations. Both the Solicitors Regulatory Authority (SRA) and The Institute of Chartered Accountants in England and Wales (ICAEW) state their members have a duty of care to their clients and the clearest way to meet that duty is to refer clients to an independent financial adviser.

In Summary...

If you would like to speak to a Lonsdale Wealth Management financial adviser complete our booking form for a free consultation or contact  your local financial planning office.

The Financial Conduct Authority does not regulate Cash-flow planning or tax advice.The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested. The contents of this article are for information purposes only and do not constitute individual advice. 

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