Benefits and Disadvantages of a Financial Adviser - Fund Your Retirement (2024)

A financial advisor specialises in offering a wide range of expertise to help both individuals and business people understand and manage their finances by taking a realistic and long-term view of their future financial goals.

When it comes to building wealth and managing your finances, building a team and drawing up an effective plan for achieving your retirement objectives, it is worth the extra time and effort.

Let’s look at the benefits and disadvantages of having a financial advisor on your team.

An independent financial adviser can help you with many of life’s major decisions such as Pensions & Retirement, Investments, Savings & ISAs, Business Finance, Tax Planning, Financial Planning, and Mortgages.

You will very likely establish a long-term relationship with this person, so don’t be afraid to shop around and find the person who is right for you: someone who is experienced, qualified, and above all, someone you feel comfortable managing your future retirement.

Schedule a fifteen minute discovery call with an FCA regulated financial adviser completely free, simply click here and schedule a call back.

HOW CAN A FINANCIAL ADVISER HELP?

Expertise: A certified financial adviser is a full-time professional who will offer you a wealth of training, knowledge, qualifications, and experience that is difficult to achieve on your own.

Such a person will likely have graduated with a suitable university degree and will have completed several industrial training programs and qualifications. Furthermore, to maintain thier competency, they will have kept up to date by studying the latest developments in the markets, investment opportunities, taxation, and law.

Research: A certified full-time financial adviser can spend time researching investment opportunities that are best suited to you. If he does not already have the answers for your own particular business needs, he will conduct the necessary research to find out.

More generally, a financial adviser undertakes research regularly to maximize his knowledge of the industry, markets, law, and taxation — so that you don’t have to. Other advisers will often assist, analysts, research teams, and industry experts, all helping to embellish the adviser’s substantial research.

Free Time: Investing for your retirement can be a time-consuming and complex skill. To become a successful investor requires both time and money. Without such a comprehensive financial understanding of the markets, as well as your financial situation and capabilities, investing becomes a shot in the dark, like gambling.

A trained professional financial adviser can save you time by managing your investment portfolio for you. Liberated from this responsibility, you are free to pursue other activities. Time is money, and you should always factor in the financial planning time and the opportunity cost of not hiring a financial adviser into your decision-making.

Relaxation: A vital benefit of a financial adviser, is peace of mind. Having found the right financial adviser, you will be able to relax properly, safe in the knowledge that your finances are taken care of by an expert investment professional who deals with a wide range of challenges that you would otherwise have to handle.

You will have more time because you will not have to study the market carefully. This is the job of your investment adviser, and he will contact you if he needs to discuss anything with you. You can also contact your financial adviser at any time if you do have any questions, concerns, or needs.

Mediator: Money can be a very emotional subject for many people. Perhaps you and your spouse view your finances differently. A financial adviser can act as a mediator, taking the emotion out of the issue and proving you both with informed, objective advice.

Objectivity: Possibly, one of the greatest threats to the performance of your portfolio are decisions based on your own emotions. A financial adviser is there to help protect you from making mistakes. Such mistakes can often undo months or years of hard work and even wipe out your portfolio altogether.

Your financial adviser can prevent this by providing objectivity. You are investing for the long-term, and a temporary shortfall in the market should not make you panic. Your financial adviser can ensure that you are informed, based on emotion-free analysis and decision making. They can work with you to establish the best outcome for your investments, and even make those investment decisions for you, without the risk of emotion.

Taxation: If you are not careful, tax can erode your investment gains, so that a seemingly less attractive investment would have been more effective. A financial adviser can take care of these concerns for you, and ensure that all possible tax scenarios have been considered before going ahead with an investment. They can also advise you on ways to reduce your tax requirements around estate planning and improve your tax efficiency, by informing you of the latest changes in legislation and notifying you of new investments that offer long-term gains.

Planning: We are all aware of the importance of goal-setting, and this is equally true of finances. One of the most significant benefits of a certified financial adviser is helping you to establish a lifetime plan. A financial adviser can assist you in establishing your long-term objectives, attaching concrete numbers to these long-term plans, to make the most out of your income, and achieve your lifetime goals.

Disadvantages of a Certified Financial Adviser

There are benefits to hiring a certified financial adviser, but there are potential risks too.

Perhaps the most significant concern of hiring a financial adviser is that they don’t always have your best interests in mind. Despite many advisers making decisions that will benefit the client, it is not unusual for conflicts of interest to arise.

You can avoid many of these problems by using a fee-only adviser, instead of someone whose income increases from selling you specific products and services that might not be best suited to your needs. Ask your potential financial adviser if he is willing to act as a fiduciary. Fiduciaries are required by law to recommend investments in the client’s best interest, not their own.

Costs: Financial advisors cost money, and not all charge you in the same way. Some charge a percentage of your total portfolio per year. Others charge you an ongoing annual fee, some charge a one-off service fee, while the investment broker pays others via commissions. Before choosing a financial advisor, you need to determine whether the cost is worth the service rendered. It is also worth noting that for some, the cost of doing nothing can be much more expensive in the long run.

Poor Quality Advisor: As with any industry or profession, not all advisors are competent. Choosing the wrong financial advisor could end up being a costly mistake in your wealth-building objectives. Ultimately, it is up to you to make sure that you are comfortable with the right financial advisor for you. Shop around, and don’t be shy when asking questions before committing.

Remember, it is your money, and you must understand what your financial adviser recommends and why.

Conclusion

There are clear benefits and disadvantages to hiring a financial advisor. The drawbacks can be mitigated, if not outright removed, providing you shop around and ask the right questions. Building wealth and making sure that you have enough for later in life when you no longer want to work or cannot work is a team sport. Surrounding yourself with the right people can bring you closer to your objectives, and finding the right financial advisor can be a valuable member of your team.

Schedule fifteen minute discovery call with an FCA regulated financial adviser here.

We hope you have a great day and wish you health and prosperity.

From the Fund Your Retirement Team.