When you have a health worry, you go to see an expert in the shape of a doctor.
In the same way, with any money concerns, it makes sense to consult a professional with qualifications and experience.
Yet a high proportion of adults try to sort out their money issues without any guidance. Whether it is a mortgage, saving for an event, providing for school fees or investing for retirement, a financial helping hand is available. The modest cost in most cases may come as a pleasant surprise.
Beyond specific issues, just as a surgery can organise a periodic health examination, so a financial adviser or wealth manager can provide a routine money check.
Yet one in five (19 per cent) high net worth individuals has never spoken with a financial adviser, according to research by Sanlam UK. They define high net worth as having over £100,000 in investments excluding pension. The survey reveals that saving for retirement is the most common concern.
Before seeing a financial adviser, it makes sense to list all debts including any mortgage and to look at its terms, to have joined a company pension scheme and to understand the protection benefits provided by the employer.
An adviser is essential for those with significant savings to ensure they are properly diversified and are on target to meet future needs. Many would also benefit from advice with certain life events, notably when money is inherited, when a child is born, when getting divorced and when best to take pension benefits.
If taking advice, check if the person is independent or restricted. NFU Mutual Insurance, for example, offers helpful ‘meet and greet’ sessions but tailors advice to its own products and those of selected providers.
Some major high street banks have diversified into partnerships, such as Lloyds recently with Schroders. It says “most people think about money up to 10 times a day but don’t even take financial advice once in their lives”.
An independent adviser can recommend their pick of all retail investment products. They include Brooks Macdonald, Candid Financial Advice, Chase de Vere and Rathbone.
However, most of the larger and better-known financial adviser firms give restricted advice such as St James’s Place and Tilney.
‘Restricted’ implies a pejorative term but it simply means that an individual or their firm does not offer every financial product area. The key point to check is if there is a restriction within the specific areas where advice is sought.
“Much of the industry is moving away from truly bespoke investment management services (but) these continue to be core to our offering,” says Redmayne Bentley.
In November the firm was named ‘Best Stockbroker for Customer Service’ at The Investment and Wealth Management Awards.
Before committing to advice, ensure you know how much it will cost and how it will be calculated. The choices are:
percentage of value.
Commission from selling a particular product is not permitted. Fee structures can be complicated with no agreed presentation by the regulator, the Financial Conduct Authority.
An annual charge may be levied which is usually negotiable for large investments. Check how competitive the proposed platform will be to hold your savings. One area often overlooked is a fee to withdraw investments or close an account.
Always ask about professional qualifications. Kelly Kirby, chartered financial planner at Chase de Vere, part of Swiss Life, says that whilst all regulated advisers need to have achieved a benchmark level of professional qualifications, additional expertise would be expected “if you have complex needs or want advice on a specialist area such as pension transfers, inheritance tax planning or long-term care”.
There are three main examination boards: Chartered Insurance Institute (CII), London Institute of Banking & Finance (LIBF) and Chartered Institute for Securities & Investments (CISI).
The basic qualification is Diploma (also called level 4) and is broadly the same with each board. Advisers can then progress to Advanced or Chartered status (level 6).
Depending on the type of advice sought, check not only that a potential adviser has passed those educational levels but, where a speciality is appropriate, has been accredited by organisations like the Society of Later Life Advisers (SOLLA).
Avoid suboptimal firms which rely on robo-advice from computer-generated programmes to construct portfolios.
Ideally gain a recommendation from a friend or colleague in a similar position or from an accountant or solicitor. Contact two or three financial advisers before selecting the one you feel most comfortable with.
An initial face-to-face meeting may be free, enabling a decision in terms of whether your needs will be met. Experience, combined with good qualifications, clearly pays over an inchoate adviser.
Expect your wealth manager or adviser to forward relevant research, portfolio analysis (such as geographical spread which is provided by Hargreaves Lansdown) and is proactive in their approach. They should not be constrained by in-house ‘buy’ lists.
Brewin Dolphin, founded in 1762 and quoted on the London Stock Exchange, has a notable Yorkshire presence. It offers a financial planning and investment management service with no in-house funds to create conflicts of interest.
Instead, bespoke portfolios are designed to meet individual requirements with £45bn under management.
Reports of visits to companies by wealth managers with their private assessments can provide a good insight for clients. J.M. Finn, a wealth manager with a Leeds office, publishes just such information on a quarterly basis. It also offers a risk profile on each major asset which it updates regularly.
Some providers, like Charles Stanley, also provide an execution-only service for those who do not want advice. Interactive Investor has one of the lowest costs for equity purchases.
Skipton Building Society will meet clients in a branch and provide a financial health check. It works with a panel of providers and has launched a range of funds in conjunction with Aberdeen Standard Investments. Higher risk areas like Venture Capital Trusts are excluded.
Complimentary financial guidance but not advice is given by two bodies set up by the Government: the Money Advice Service and Pension Wise.
Fact sheets on funds and trusts should be checked periodically even though some managers only reveal their full holdings annually.
Those who closely followed the Woodford collectives would have found that a high proportion was in unlisted securities which caused must of the subsequent mayhem.
Finally, a good precaution is to examine the Financial Ombudsman’s public online site to see if the intended advisory firm has received adverse rulings.
Conal Gregory is AIC Regional Journalist of the Year.