Lowes Magazine Issue 115

ADVICE

Why people seek advice The reasons that people first seek advice differ but often they are because someone has experienced a life event or they are about to enter a new phase of their life and they need help in sorting their financial situation as a result. Common reasons revealed by the research were a desire for a financial health check, a change in family circumstances, like marriage, and the need for advice on saving for a child or grandchild. From an investment perspective, some of the key benefits of Independent Financial Advice highlighted were that advice focuses investors on their long-term return expectations keeping them calmer in the face of short- term market events; use of tools when building portfolios that can incorporate the potential for extreme events, showing their effect on a portfolio and the recovery and growth periods that tend to occur after those events; and how having a carefully thought through financial plan put investors in the best position to achieve their longer term objectives. A benefit less talked about than the financial advantages of advice, but of equal importance, is the emotional wellbeing of investors. The Dynamic Planner/Henley Business School research faced savers with a market crash scenario which saw a decline in their pension values. The results showed that 58% of respondents who had experience of financial advice were concerned, while 25% were still optimistic about their financial situation. However, of those without experience of financial advice, 74% were concerned and only 12% were optimistic.  It is the feeling of wellbeing, or peace of mind, in itself which is a valuable benefit that many of our clients’ attribute to having the support of an Independent Financial Adviser.

More people see value in financial advice

THE IMPACT OF THE CORONAVIRUS, WHICH caused widespread financial uncertainty, has served to highlight the need for Independent Financial Advice. Two sets of research have identified the growing recognition of the value of advice. Assurer Aegon and investment risk company Dynamic Planner, in conjunction with Henley Business School, discovered that advised investors are better off financially and in terms of their emotional wellbeing. The Aegon research found that a quarter of those interviewed said they had sought financial advice for the first time. When we start off saving and investing, initially there will be fewer investments to manage. As our portfolio grows, either in terms of its overall value or the number of investments, then it becomes more difficult to manage and to know if we have made the right decisions. In addition, the wealthier we become the more we need to assess the potential impact of tax, both short-term and long-term, on the value of the investment wealth we are accumulating. Good Independent Financial Advice has been proven to be more effective in building wealth than the DIY route. Research conducted by the International Longevity Centre-UK over a number of years has shown that advised individuals were in general around £40,000 better off than those who did not receive advice. We would urge anyone who has a portfolio and feels they need help in how best to manage their money and to build up substantial savings either for their retirement or specific goals – school fees, helping family get on the property ladder, leaving a legacy for beneficiaries and so on – to seek Independent Financial Advice, so please do not hesitate to put friends and family in touch with Lowes.

LOWES CONSULTANT Stephen Hoggarth says: I was interested to read in the survey results mentioned, that people said they had delayed seeking Independent Financial Advice until now because they thought they had to have a lot more savings and investments to make it worthwhile.

One of the primary aims of Independent Financial Advice is to help people to build their wealth over time. In my experience there are two main hurdles to overcome in this respect. The first is starting to invest and regularly. The second, having grown your investments and savings to a certain point, is being able to continue to manage the portfolio and knowing when to seek advice to ensure your wealth is invested and maintained effectively and tax efficiently. The focus of Independent Financial Advice is as much about helping to preserve wealth as it is building it. A second reason people cited for not seeking advice was a lack of confidence or fear of being judged on the investment decisions they had made thus far. My response is to say as advisers we are not here to judge; we are here to help. Seeking Independent Financial Advice is not only a sensible option but will ensure your wealth is professionally managed, relieving you of the day-to-day task and stress of doing so.

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