Is it really worth me meeting a financial adviser?
Written by Carl Turner on February 28, 2017.
For many people, the thought of going to see a financial planner is like going to the dentist. They know it’s something they should do – but fearing an unpleasant experience, they put it off.
Most of the time the common objections given are self-reasoning avoidance techniques to procrastinate and not take control.
The most common objections people have to sitting down with a professional are:
• I can do it myself
• The fees are too high
• I don’t have the time
• I don’t earn enough
I’d like to use this blog post to debunk these falsehoods by taking them one by one.
1. Going it alone
I won’t argue that you can’t do your financial planning yourself but that doesn’t mean that you should. There are compelling reasons for having a professional by your side and statistical evidence to back them up.
The Financial Planning Standards Council (FPSC) of Canada has carried out research over a five year period and come to the following conclusions:
47% of those with no financial planning (DIYers included) feel that their finances are out of control whereas only 17% of those with comprehensive plans from professionals did.
18% of those with no financial planning feel they are on track to reach their retirement goals compared to 51% of those who took professional advice.
A planner can help you gain a feeling of control which, I know from experience, impacts hugely on wellbeing. I’d also add that having someone onside to keep you focussed and motivated through difficult times is a huge benefit.
2. The fees are too high
Different advisers charge in different ways but we at Infinity are transparent about how we get paid and it is usually a percentage of what is invested, which is fully disclosed. We pride ourselves on our transparency and will only apply charges with prior agreement from you.
3. No time
My reply to those that argue that they don’t have time to sort out their finances is ‘make time’! The stakes couldn’t really be much higher than your family’s financial security so this is definitely something to prioritise. Yes, you will need to find some time in your busy day to have an in-depth consultation with a professional in order for them to help clarify your goals and how much risk you are comfortable with taking for your investments but that is time very well spent. Once you have formulated a plan together the ongoing time commitment really is minimal, although regular reviews are advisable.
4. Insufficient earnings
The concensus that financial advisers are only suitable for the super wealthy is widespread and in part accounts for the fact that the Consumer Federation of America (CFA) found that only 28% of American households have met with a professional financial adviser or used online planning tools. I would argue that those who are at the start of their careers or in middle management could benefit equally, if not more, from taking professional financial advice. Whether you earn a 5, 6, 7 or 8 figures per annum, you still need to plan for your retirement and protect your wealth with relevant trusts and insurance. A good financial planner will work to your budget and match products to your requirements.
So do you really need a financial adviser? The answer is a resounding yes! If you’re not convinced by the arguments above, consider that another piece of research carried out in Canada, this time from the Center for Interuniversity Research and Analysis on Organizations (CIRANO), found the value of advice to a household increases over time.
The study showed that households which used a financial advisor for more than seven years were on average twice as wealthy as those households that didn’t use a financial advisor. When the wealth of households who have been receiving financial advice for over 15 years was compared to households who didn’t receive advice, the difference in household assets rose to 2.73 times, showing that financial advisers contribute significantly to the accumulation of financial wealth.
Put simply, statistically there is a higher probability you will be richer with an adviser on board!