Why do I need a Financial Adviser?

Top 10 reasons!

As 2021 progresses and hopes of a better year than the last increase, I thought I would write about a question that arises for me occasionally in social situations. From time to time, I am asked, “Why do I need a financial adviser?”, or sometimes it’s simply an assertion, “I don’t see the point of having a financial adviser”. My usual response is to give a brief overview of what I do, however, depending on the circumstances, I don’t always offer a thorough response and then subsequently regret not having taken the opportunity to fully outline the benefits offered from the work my peers and I do.

I appreciate that in terms of popularity and reputation, my industry is not at the top of the pile – sometimes being undermined by the disturbing stories of people being scammed (particularly in the field of pensions), and also a small minority of advisers who are exposed as either not qualified/licensed to operate, or who fail to act in the interests of their clients.

However, I know from the feedback that my colleagues and I receive from many of our clients that the work we do is appreciated and valued by many – sometimes for quite different reasons. So, I thought I would outline the benefits of why, if you do not currently have an adviser, you might want to consider exploring whether your finances could benefit from professional advice and ongoing support.

This list is not meant to be exhaustive and I have tried to avoid a generic list, instead drawing upon feedback and anecdotal evidence from individuals – some clients, some not…yet! Hopefully, my list provides a selection of reasons why I believe the work we do can be of significant value to many.

1. Saving money/growing money

The fundamental purpose of my role is to help my clients save money, and to grow and protect the money they already have. Such savings can be made through lower fees, reduced currency exchange risk, tax-efficient investment structures, and ensuring the best pension scheme for the client is selected. These same actions can also have a positive effect on the growth and protection of a client’s money. By choosing the right investment, an impact can be made on reducing inheritance tax liability for loved ones. Furthermore, if the worst happens to you, by selecting the best pension structure, you can ensure that your loved ones can be beneficiaries of your entire pension, in accordance with your wishes.

2. Greater choice of options

Of the financial solutions that I can offer my clients, few (if any), are available through banks or insurance companies – schemes offered directly through these organisations are usually the company’s own in-house products. I am not suggesting that these options are not suitable, but the advantage of using a financial adviser is the breadth of choice and the ability to select the best available products that most accurately suit the individual. Also, whilst some financial products are available directly to the consumer, many are not and can only be provided in conjunction with professional advice.

3. Sounding board

Sometimes in life, it is nice to have someone to discuss important matters with. People often turn first to their spouse or partner, friends, and sometimes work colleagues. I often speak to people who believe that they have their financial affairs in good order, but they value having a professional and independent “financial health check” to confirm that they are on track, or to provide an objective perspective on some of the areas that might need some attention.

4. Acting as your better conscience (or encouraging people to do what they know is right!)

Let’s be honest, most people enjoy spending their money – whether it’s on their home (often, but not always, a good investment), clothes, food, entertainment, cars (virtually guaranteed to be money-losing, unless classic/vintage cars are your thing!), and holidays.

It is not always easy to take a portion of your regular income and set it aside for the medium to long term, and of course, not everyone has the luxury of having a surplus at the end of each month.

However, a good comprehensive financial review doesn’t just analyse your assets (e.g., pensions, investments, savings, property), and liabilities (e.g., mortgage, credit card debts, car, and business loans), but also reviews your income/expenditure and your long-term wants/needs, to help assess whether there is the capacity to save, and how much.

A good financial adviser will encourage you to think about the long term and help you to take the right steps towards financial security.

5. “I have no money to invest” / “I can’t afford to use a Financial Adviser”

This is a response I occasionally hear, however, irrespective of financial situation – whether the individual’s money is invested in their business or home, or they live on a low income – I am always happy to conduct a financial review. I can usually share some valuable insights, even if the person does not subsequently become a client. Do not let these reasons put you off speaking to an adviser – my confidential financial reviews are free of charge, and there is no obligation to accept my advice (although, I am pleased to say, most people do!).

6. Protection and risk

Many people associate financial advisers with pensions or investing/growing wealth. However, a crucial part of good financial planning is about protecting any wealth that you already have, and making contingency plans for all possible disruptive events that might come your way. When conducting a confidential financial review, I always ask if such matters have been considered, and whether arrangements are in place to provide financial protection in all eventualities. Life insurance is not always necessary, but a will is essential – I can put people in touch with English-speaking professionals in France who can assist in both these areas.

7. No time

For those whose lives are extremely busy (I think many of us can relate to this category!), they simply do not have the time (and/or inclination – see point 9!) to look after their financial affairs. Often people know they should be devoting at least some attention to their long-term financial security, but just never seem to get around to taking action. Sometimes, these people are well-informed and know very clearly what their financial objectives are, but do not have time to implement their plans and would rather a professional undertake this work on their behalf.

8. Retirement planning

In this area, the work we do is not just about advising individuals on the importance of saving for the future or selecting the best scheme for their individual needs.

For British nationals living in France who have private pension schemes in the UK, a proper analysis should be conducted to decide if it is best to leave their pension schemes where they are, move them to a UK-based SIPP, or possibly offshore into a QROPS. There is no one correct answer and I am not going to get into the detail of this now – it was the subject of my last article!

The second critical element of this work is to forecast what level of income someone will require in their retirement once other sources of income reduce or cease, and to then plan how that need will be met through rigorous financial planning.

9. No interest in financial affairs

Of course, this is one that I struggle to understand! I have a relative, who will remain anonymous, who encapsulates the example perfectly. This is someone who is financially comfortable, but genuinely finds the subject of savings/investments (or anything to do with managing their money), of absolutely no interest – to quote, “Boring”!

As long as their money is secure and providing some growth, then they will quite happily entrust as much of the decision making as possible to their financial adviser. The key to this working is to get to know the individual very well, understand their risk profile, and be clear on the circumstances of when they wish to, or must, be consulted on decisions.

10. Knowledge/expertise

The final reason to use a Financial Adviser (and I accept this is obvious, but I needed a tenth!), is for the knowledge and expertise they can offer on available products (relevant to the country in which they work). The good ones will ensure that they thoroughly understand their clients, establish solutions that align with the individual’s aspirations, risk profile, and ethical stance. It is important that your adviser is permanently based in France, works for a French company, and is properly licensed with the relevant regulatory authorities. Above all, make sure they are someone you feel a connection with, who understands you, and who you feel confident in establishing a long-term working relationship with to support your financial goals.

In conclusion, last year was incredibly challenging for many people – both financially and emotionally – and whilst some of the restrictions we have all lived within have eased, realistically, it will be some time before life resumes with some sense of normality. Whilst everyone’s health – physical and mental – must always take priority, I honestly believe that knowing that your money is protected and growing tax efficiently, and that you have taken the necessary steps towards your long-term financial security, is one less thing for you to worry about and makes a small but important contribution towards peace of mind.