As you know, I’m a big proponent of equipping people to make their own financial decisions, believing that anyone, with a bit of encouragement and know-how, can do most of their own financial planning. But there are occasions when seeking professional advice makes sense.
Ask yourself: Is Advice Necessary?
Most people approach financial advisers at a time of transition – something has changed that makes them seek advice. Might be an inheritance, a sale of property, a lottery win, a new child on the way – generally speaking, people don’t just wake up one morning and think that the thing they’d really like to do that day is talk about money with a stranger.
I think it is wise to take a minute to think before reaching for the phone or the web browser to check out who is in your area. Take a minute to think about whether you even need to seek advice at all.
The way to answer that question is to ask another one: Ask yourself what might you need to do in light of the transition or trigger that has made you think about seeking advice. Might be easier to explain this with an example:
Let’s say you find out you’re inheriting £100,000 from the estate of a distant relative. What sort of questions might that raise? Should you pay off debt or invest? Or a bit of both? Is there a ‘best’ thing to do in your situation?
If you’re going to invest, do you know how to do that? If not, do you want to learn, or do you want to delegate? Do you even have the time? I think that for the most part, you’ll be well-served seeking advice if:
- You have no interest in learning how to manage your own financial planning and investments
- You don’t have the time to do it
- You perceive that the complexity of your affairs might make it beyond your abilities to handle well
- You’re within spitting distance of retirement
Taking those last two a little bit further, complexity is often more perceived than real. I’ve spent the last eleven years explaining how money works in everyday language. For most of us, our situations are not that complicated.
If there’s a trust involved anywhere, or if there are overseas assets, or you have mixed-tax residency – those are the sorts of complications where it might make sense to bring in an expert.
Retirement, by definition, is complex. The number of choices available to you, and the interplay between streams of income, managing investment and pension funds, the pension lifetime allowance and lots more besides mean that almost everyone is well-served seeking advice in the run-in to retirement.
In any other circumstances, you can likely save the cost of advice and do-it-yourself, with the help of your favourite financial podcaster and his enormous back-catalogue of information!
