OUR finances are not the most glamourous part of our lives, but nonetheless crucial to manage – and manage carefully, especially in an economic environment that is currently hostile to saving for the average household.
Financial advice is necessarily individual, and unique to the needs of different people. But knowing when you need it can be difficult, let alone how to choose the right person from which to solicit advice. Here is everything you need to know about financial advice, and how to avoid the negative consequences of poor advice.
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When Do You Need a Financial Advisor?
Financial advisors are professional practitioners that work with businesses and individuals to help them make the most of their financial situation. As outlined above, each individual situation is different, and no one approach is necessarily suitable for all. Someone might be wondering how best to save their money for retirement; someone else might have come into a large sum of money, and have no idea how to effectively save or invest it.
You might find yourself needing a financial advisor for the same reasons. Essentially, your need for financial advice will stem from your familiarity – or lack thereof – with certain systems or obligations. You might be starting a new business, looking for counsel on submitting a self-assessment tax return or even trying to figure out a tax-efficient route to leaving money and assets behind for your family.
The Consequences of Poor Financial Advice
While financial advice can be hugely impactful for the retention and growth of wealth, or even the simple act of remaining legally compliant in handling certain monies or transactions, the cost of poor financial advice can be hugely harmful. For example, an advisor may give you improper advice regarding declaring earnings on an investment in the stock market – leading you to fall foul of tax law.
In many cases, improper financial advice amounts to financial negligence, and can come at a heavy cost to inadequate advisors and practitioners. Victims can seek civil action in this regard, and recoup some of the costs incurred through following improper, inappropriate or illegal advice – but in many cases, the damage is already done. It is far better to avoid this eventuality altogether; how, though?
Choosing an Advisor
In choosing a financial advisor, you first need to understand the specific nature of your situation. What do you need advice on? If you are looking for information and assistance with regard to your mortgage, there are industry-specific professionals that often go by the term ‘mortgage adviser’ for you to contact. For retirement advice, contacting a financial planner would enable you to more directly address the structure of your spending and saving.
The next step is to create a shortlist of potential advisers, and to vet them according to credentials. Any adviser you work with should be registered with the Financial Conduct Authority (FCA) in order to ensure they are legitimate, trained and certified.
