Getting Financial Advice – The initial steps

There are some financial steps that many of us can probably take ourselves without the need for professional advice, and with just a little research online. For example, writing a simple will, putting some money aside each month into a work pension (your employer is obliged to enrol you into their work pension automatically these days) and paying off debts.

But as you start to accumulate assets and your situation potentially becomes more complex, it’s natural to think about seeking advice. That might be to help with the financial implications of a specific situation such as retirement, the sale of a company, divorce or the birth of a child. Or it might be to seek reassurance that you are on the right track financially (and to make any necessary adjustments if you’re not).

Understanding your needs

Whatever financial decisions you have to make, the first step towards making the right decisions for you is to establish a clear understanding of your financial needs.

These might be obvious – for example, you’ve taken out a mortgage and need insurance to help your family pay it off should you die. Or they might be less obvious – for example, you’ve accumulated some money over time but don’t know how much you need to retire.

One of the most valuable things an adviser can do for you is to draw out a clearer vision of your financial future. They can help you understand what options you have around longer term issues, such as retirement, estate planning and looking after your family. If you have an obvious and immediate need, they can also help you to meet this, in the form of a financial product.

Talking to an adviser you may even find you have financial needs you’ve not yet considered. An adviser’s professional experience can help to tease these out and address them for you.

Unless you understand your needs you won’t know which direction to take and what your destination will be. It’s impossible for you or an adviser to decide on the right solution for you without understanding your needs.

Setting your financial priorities

Once your financial needs are clear, the next step is to be clear on your priorities.

Depending on the amount of disposal income and investable wealth you have, maybe you’ll be able to satisfy all of your financial needs. Or you might need to prioritise some over others. An adviser can use their expertise to help you work things through in this area, and develop a plan of action that suits your personal situation.

As a general rule, the first thing you would normally look to do is ensure that you and your family are protected in the event of misfortune, such as ill health or death.

Getting the right insurance cover might sound relatively simple. Many of us can go online and buy fairly straightforward policies such as holiday or motor insurance with ease. But where greater knowledge or technical expertise is required, an adviser can add value.

A good example is critical illness cover, which pays out a lump sum on diagnosis of a ‘critical’ (but not necessarily fatal) condition. Critical illness cover can be difficult to compare without expert knowledge, because different companies use different lists of conditions as a basis for their cover. An adviser would be able to tell you if the reason one company might be offering cheaper cover is that it has a relatively narrow list of illnesses on which it pays out.

Income protection is another area where an adviser’s knowledge can help. This is a useful insurance, especially for the self-employed, providing financial cover if you’re unable to earn because of injury, sickness or (if you’re employed) redundancy. There are rules, though, which limit how much cover you can have based on your income. Without knowing what these are you risk paying for a policy that doesn’t pay out when you need it to.

It’s not just about choosing the best value insurers. You may also benefit from an adviser pulling together just the right combination of insurances to meet your particular needs.

Always ask whether your adviser is choosing from the whole of the market or if they are contractually obliged to use certain ones.


Important notice: This information is of a general nature and is not an offer or a solicitation to buy or sell any financial instrument or provide any financial services. No responsibility is taken for any losses, including, without limitation, any consequential loss, which may be incurred by acting upon advice or recommendations contained in this piece. The value of investments and income from them may go down as well as up and you may not get back the amount you originally invested. Tax is dependent on your personal circumstances and may change in the future.

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