Not having an adviser is a risk

A question that people often ask is: do I need a financial adviser? Can I save on the cost of advice and work it out myself?  A video on the Bloomsbury Wealth YouTube Channel.

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Transcript: Robin Powell & Philip Courtenay/ Behavioural finance expert

RP: A question that people often ask is: do I need a financial adviser? Can I save on the cost of advice and work it out myself? Well, you CAN do it yourself. But there are substantial advantages to using a financial adviser. Philip Courtenay is an expert in behavioural finance.

PC: What we tend to find with non-advised individuals is: they often take less risk, they often have a lower perceived sense of financial wellbeing as well – so they feel less in control, they feel less clear about their financial situation and their future financial prospects, and they feel more anxious often because they don’t have that person to say, “You’re doing the right thing,” or, “here’s what the future could look like. You’re in control, and you’re doing a good job financially.”  So there are traditional, rational reasons for engaging with an adviser; and there are also emotional reasons for doing so. And I think they’re both very important.

RP: What some people choose to do is a compromise. They’ll hire an adviser on an ad hoc basis — for advice, say, on tax or estate planning — but they will manage their portfolio themselves. Again, that’s perfectly feasible. But it too is a risk.

PC: Managing your own money can mean such different things to so many people. I interview lots of financial consumers – lay people, advised or not advised – and they say, “I manage all my investments,” and what they really mean is that they put the money in the bank. And I can ask the question: do you know how much you have in your pension pot, for example? And often they won’t be clear on that.   So I wouldn’t perceive that as managing money. That is, the money isn’t managed but that doesn’t mean the individual is managing it themselves. Some others dabble in the stock market, they might have an online account that they might do bits and bobs with. And I’m not suggesting that’s the wrong way to do it at all – I think there’s a time and a place for that if people invest in certain ways, often index funds, look at the cost they’re paying, do some due diligence: then they can often make some good financial decisions. Avoiding what the future might look like, avoiding those financial decisions, avoiding taking any risk… that’s the biggest risk, in my opinion.

RP: So how do you go about choosing a financial adviser? For Philip Courtenay, there are two main things to look out for.

PC: Trust is the key one, always. And, for me that would be absolutely fundamental. Any adviser relationship – talking about money or anything else – you need to be able to trust the person who is giving you advice. Credentials is a key one: we live in an age where you can get “advice” through TikTok and Instagram and all these places that a regulated adviser would absolutely baulk at and say, “that is not financial advice.” But people think it is.  So I would say: make sure somebody has got the credentials, first and foremost. And make sure you trust them. If you have those two things in place, you can have an open and honest relationship around what money really means to you, and what’s important to you – then you’re probably onto something pretty good.

RP: In short, you CAN manage without a financial adviser, but there are major drawbacks. If you find an adviser with solid credentials, and who you really trust, that generally is the best option.

Disclaimer — The information in this video does not constitute advice or a recommendation, and you should not make any investment decisions on the basis of it. If you do however require advice please do not hesitate to contact Bloomsbury Wealth.