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An overview with Guy Myles

Time to rethink financial advice

Guy Myles, 2 February 2016

Getting professional guidance on what to do with your money is without doubt the best way to achieve your financial goals. Here's what makes financial advice so vital:

  • It's personal - designed to meet your needs. A good financial adviser will ensure your investments are aligned with your lifestyle, your long-term goals and your personal attitude towards investing

  • It's built for the long-term - a good financial plan will be designed to grow with you and your needs, adapting to suit any changes to your lifestyle and goals

  • It can save you from your worst enemy - yourself. Investors often take more risks than necessary and they don't always make the best investment decisions. A financial adviser can help you avoid those impulsive decisions that could have a long-term impact on your finances.

  • It can help you in ways you haven't considered - a good financial adviser will be able to make your financial plan more tax-efficient, helping you to save money and devote more of it to your investment goals.

But if financial advice is such an obvious benefit to people, why don't more of us use a financial adviser? The reasons are well-known. Because many people believe financial advice is too expensive and out of their reach.

Figures from advice website unbiased.co.uk show that an initial review with a financial adviser is likely to cost on average £500, with any additional advice expected to set you back a further £150 per hour. For many people, that's just not affordable, especially when the internet encourages people to look for far cheaper ways to do it themselves.

This means that most people are either unwilling to pay for advice, or they would prefer to go it alone, making their own investment decisions and potentially suffering the consequences of making their own - expensive - mistakes. So saving money by taking advice out of the equation has the potential to cost even more in lost returns and disastrous decisions.

If advice is expensive, does that mean it's worth paying for? Perhaps not. For many investors who are prepared to pay for advice, the costs actually erode some of the benefits. High fees and charges for financial advice and investments can put a significant dent into the long-term returns of even the wealthiest investors.

And because financial advisers usually charge a percentage of the investment for their services, this means wealthier clients are actually subsidising those clients investing with less. We don't think this is right either.

What's more, the majority of financial advisers don't operate a lean or efficient business model. Most use a range of different fund managers and product providers to ensure they offer their clients a 'whole of market' service. The problem with this is that every fund manager and product provider is trying to make a profit for its shareholders, and will therefore charge a high fee for the privilege of investing with them.

See how all the costs are starting to add up?

But the solution is surprisingly simple. Make the cost of financial advice and investing affordable and fair - for everyone.

Flying Colours does this by setting its costs at a level that is affordable, no matter how much you want to invest. When we recommend investments, we set a fee limit, so that larger investors aren't penalised.

Financial advice can make a positive difference to people's lives. There's just something wrong with the way it is currently being offered to people. We're keen to change that. We believe that we can make financial advice easy to understand, and more affordable, for everyone.

Why not visit our services page to see how we can help you?


Categories: Financial Planning

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