Value for money
THERE’S no disputing that financial advice provides tangible benefits, not least the extra value it adds to your investment by enabling you to make the right decisions at the right time and more importantly stopping you from making bad ones.
This is known as Adviser Alpha, or to put it another way, delivering more for you than you can deliver for yourself.
But that’s not to say that once your adviser has set you on the right path he or she should simply wave goodbye and disappear off into the ether.
If you’ve bought financial service advice in the past and continue to pay ongoing service charges you should receive something more for your money.
But unfortunately, many people who’ve had investments arranged for them go on to have little or no interaction with their adviser other than maybe a letter once a year.
The client also has some responsibility here.
By failing to take up the offer of advice they are potentially missing out on the Alpha.
Given that ongoing advice fees are typically charged as a percentage of the value of your investments annually, starting at a low point of 0.5% rising to 1% at some practises, this can make a sizeable dent in the value of your investment.
It follows that you should get something tangible of value for it.
However, if you find yourself in a situation where you are receiving little or no communication from your financial adviser each year you should challenge them over it or look for someone who is going to deliver a more involved service for you.
At Faron Partnership Ltd we would provide an annual review meeting as the bare minimum plus we’re on-hand all year round to assist with any issues or questions you may have.
This review meeting includes a financial forecast so you can put your money into context and see how it meets your income and capital needs for the future.
This guides us as to how your money should be invested to achieve your objectives which are likely to shift as you move through life.
If all you’re getting is an annual statement once a year asking if you want a catch-up meeting then it’s clear you’re not getting good value for money.
Sometimes what happens is that advisers have accumulated a lot of clients over the years which they are unable to look after adequately – they simply don’t have the manpower.
Remember, if you’re paying a fee for ongoing advice, that’s what you should be getting, especially as most people’s needs shift from year-to-year meaning their financial direction may need to be adjusted as well.
Remember, the value of your investments can go down as well as up. Past performance is not a reliable indicator of future outcomes.
Pencilling in an annual review meeting is the least we can do to help you manage your finances – we’re also on hand all year round to assist with any queries or questions you may have
With Faron Partnership’s ANDY PULFORD