It’s interesting. Every now and again we get asked about the cost of our service. Cost is a factor that everyone should consider when engaging any service but particularly when it comes to getting financial planning or advice. There’s no denying that high quality independent financial advice can seem expensive. However just focussing on cost might not be telling you the full story.
That’s why it’s important to consider a number of specific additional factors when thinking about the cost of a financial planner. These are:-
1) Value vs price – We all know that price is what we pay but value is what we get and this is particularly true when it comes to financial advice. Our experience is that whilst our fees certainly aren’t low cost we won’t personally take a client on where we believe our fees won’t add significant value. This value might be added in ensuring someone has a clear route to financial independence, or just by making sure they’re making significant savings in tax or ‘produce charges’ however I’d always suggest that instead of focussing the conversation with any potential adviser you select around price…focus it instead on the value they might add.
2) Being ‘pound wise’ – Picking the cheapest financial adviser can be like picking the cheapest lawyer, boiler engineer, electrician or private surgeon. It might save you a few pounds in the short term (being penny wise) but over the longer term might ending up costing you a decent amount more (being pound foolish). I’d suggest that selecting the right adviser is about being pound wise. Not selecting the cheapest but someone who is independent, highly qualified and transparent about their fees.
This will then allow you to be more confident in their advice adding significant value over the longer term…ensuring you’re being pound wise.
3) Why free advice isn’t really advice – Let’s be clear financial advice has never been free. It used to be paid for through the commission paid for products, which ended up costing a lot of consumers more than paying for the advice up front in the first place. This has now changed and fees should be more transparent when engaging with a financial adviser or planner. However we still hear about free advice and whilst I’m a natural optimist let me make a humble suggestion.
I’d suggest that Free advice is never free. There’s always an incentive hidden somewhere with ‘free advice’…and I for one would prefer good quality, transparent fee based advice than anything free. With advice I pay for it gives me a greater ability to know where I stand with the advice and helps me avoid being sold a product designed to provide a ‘free’ advice service.
4) Is what you’re getting strategic AND tactical – Often the advice people seek initially is tactical. What do I do with some money, or what do I do with the bunch of pensions I’ve currently got. However most of us are looking for a strategic plan…this answers some of the broader questions like…”Have I got enough?” or “Can I afford to live the life I want” or “What are my longer term goals and how do I achieve them” – If you’re paying for advice but you aren’t getting an answer to these questions then you might want to consider the advice you’re receiving and whether you’re getting real value.
5) Considering other (arguably more important) factors – Cost might be an important factor to consider…however If I was selecting a financial planner or adviser to work with I’d suggest that cost would be a on a list of things I’d expect from my financial planner or adviser and not the top priority. I’d also recommend that you check out a financial advisers qualifications, who they specialise in working with, their testimonials and reviews as well as meeting them to see if you’re going to get on. Arguably these factors are all more important than the ‘cheapest’ financial adviser.
These are all factors I’d consider when thinking about the cost of financial advice. All factors which will help and support you pick someone who is the right adviser…as opposed to just the cheapest! I hope this helps you when you need advice to select the right professional to support you…