The value of financial advice

You may have heard us say before that we believe the traditional wealth management model is broken. It’s too often focussed on selling products, rather than what those products can help you achieve.

And we believe it’s this approach that has put many people off receiving financial advice in the first place, which is a massive shame given the value that it can provide to them and their families.

So, to enhance your opinion on the value of financial advice, we wanted to share a couple of pieces of recent research.

The usefulness of advice

The International Longevity Centre (ILC) is a think tank addressing issues of longevity, ageing and population change.

Their research considered two sets of people: the “affluent”, and the “just getting by”. It looked at whether those who received financial advice between 2001-2007 had accumulated any more liquid wealth than those who didn’t by 2012-2014.

The results:

The “affluent and advised” group accumulated 17% more liquid financial assets in comparison to the “affluent and not advised” group. The “just getting by and advised” group fared even better than their non-advised counterparts; building 39% more in liquid financial assets.

So, how do advisers help?

“Advisers Alpha”, the white paper by investment management company Vanguard, broke the answer down into five key areas;

1.A suitable investment portfolio – well diversified, with a suitable risk profile and rebalanced regularly.

2.Appropriate costs – by keeping costs low, investors receive more of the return.

3.Behavioural coaching – keeping an investor on track and coaching them not to react emotionally.

4.Use of tax allowances – ensuring investors use the tax efficient allowances available to them.

5.Spending strategy and withdrawal order – understanding how best to deliver your income and how to draw it tax efficiently from your investment portfolio.

Vanguard say there’s most value in point 3; behavioural coaching.

Why?

Most investors don’t understand the importance of remaining disciplined over the longer term, and particularly during times of heightened uncertainty. This is when many people choose the wrong course of action.

Behavioural pitfalls such as trying to time the markets or chasing performance are among the biggest mistakes. But without an adviser, how would an investor know this? How would they know when to remain disciplined and when it’s time to make a change?

The bigger picture

At Cooper Parry Wealth, all of the above aspects form a really important part of how we help clients make the most of their money.

So, if you’re thinking about the benefit of bringing in a financial planner, or, if you’re interested in hearing more, then please get in touch.

The value of investments and the income from them can go down as well as up and you may get back less than you originally invested. Past performance should not be regarded as a guide to the future. The investments described may not be suitable for all recipients and this content does not constitute personalised investment advice. Cooper Parry Wealth can take no responsibility for investment decisions you may take as a result of this information.