How much value does a financial adviser add? It’s probably a lot more than you think! Up to 3% per year on average over the long term, according to some industry studies. We have set out below ways a good financial adviser can add value;
1. Suitable Asset Allocation
What does this mean? Selecting the appropriate mix of equities (shares), bonds, cash and other asset classes such as commercial property and private equity. Explaining everything to you in straight forward, jargon free language. Day to day the financial markets tend to be volatile, with a lot of news stories and share prices that go up and down, however over the long-term financial markets are surprisingly consistent.
2. Rebalancing
What does this mean? Having taken the time to set appropriate asset allocation, it is essential that the portfolio is regularly reviewed and rebalanced. Shares are likely to outperform lower risk assets, such as bonds and gilts over time. Regular review and rebalancing keeps the portfolio in line with your goals and planned returns.
3. Cost – Effective Implementation
What does this mean? The average cost of a fund to a UK investor is around 1.5% per year, however we have access to funds which are much cheaper but perform equally as well.
Unlike in other areas of life, more expensive is not necessarily better. Research shows that lower-cost funds are more likely to give better returns in the longer term.
4. Behavioural Coaching
What does this mean? Few investors stay calm during periods of uncertainty or in turbulent markets and many end up taking the wrong course of action. In almost every type of market, investors lose money when they try to respond to news or anticipated events. We remind our clients of their plan and help them put emotions to one side when markets get tough. By helping clients avoid behavioural pitfalls and ride out the turbulent times, we hope to build further trust in our client – adviser relationship.
5. Tax Allowances
What does this mean? The benefits of investing in the most tax efficient way will compound over time. Using ISA allowances, pension allowances, the capital gains tax allowances and dividend allowance in the most efficient way and claiming all tax reliefs can add real and measurable value to any client. Using the right type of investment wrapper for the right type of investment depending on the tax position of the underlying investment is key.
6. Spending Strategy
What does this mean? Many investors will have taxable and non-taxable investments. With this in mind, we can add significant value by ensuring that spending from investments (either in retirement or beforehand) takes place in the most tax-efficient way possible. The withdrawal from funds in the correct way will have a big impact upon the amount of tax a client pays and the continued growth of any money which remains invested.
Most importantly, we provide you with PEACE OF MIND that your finances are in safe hands and in the best possible shape. The list does not include other valuable areas of financial advice such as inheritance tax and long-term care planning, both of which, when done professionally, can save clients significant amounts.
Contact LFBB to arrange a free finances health check with one of our financial planners. Please call 0114 272 9721 or use the link below.