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What is a Financial Advisor

A Financial Advisor is a professional who can help you with many aspects of your finances. This can cover pensions, investments, and much more. They can improve your finances, help plan for your future and give you general peace of mind that your affairs are being looked after in the best way possible.

Leaf Financial Advisers Ltd. - Bristol based Financial Advisor

What exactly is a Financial Advisor?

Simply put, a financial adviser/advisor is a professional who provides a financial service to clients, which is based around their financial situation and needs. 

They are able to help in a range of situations, from advice on pensions to investments, financial planning, including retirement planning, tax, insurance, trusts, general management of your personal finances and estate and much more.

In the UK, financial advisors must complete specific training and be registered with a regulatory body (the FCA*) in order to give advice.

Financial Advisors are often referred to by the type of financial advice they focus on, such as a Financial Planner, Pension Advisor or Wealth Manager, though many Financial Advisors offer multiple services.

What does a financial advisor do?

There are many things that a Financial Advisor can do for their clients, depending on the client’s situation and needs and the types of services the advisor offers.

The first, and one of the most important, things that a financial advisor should do is to understand your current situation completely, including your goals (e.g.  knowing your investment objectives, such as retirement or house purchase) as it is essential to be able to give the right advice.

Financial advice can help you in many ways such as:

  • Develop a financial plan
  • Build an investment portfolio.
  • Design an estate plan
  • Review insurance and protection to make sure you have the right protection in place for the right cost
  • Planning for your retirement
  • General money management
  • Guidance on how to reach your personal financial goals.

They can evaluate where you are now financially and then create a plan for moving forward with their guidance. They can also work with you throughout the year so that any changes in your situation can be accounted for as well as making sure that nothing has changed since the last meeting which would require looking at things differently than before.

A financial advisor may be called a financial planner or wealth manager

Before you hire a financial advisor, it’s important to understand what they do and how they differ from other professionals.  A personal financial planner is not the same thing as a wealth manager and they will offer a different selection of services and advice.

Both financial planners and wealth managers can be seen as types of financial advisers who specialise in a certain area of financial advice.

Financial planners focus on providing a long-term planning service that brings in many aspects of your financial life and future to try to both maximise the potential of your finances and help you reach your goals and understand your future.  This difference is explained in more detail in our article on the difference between a Financial Adviser and a Financial Planner.

Wealth managers focus on clients with a high net worth and specialise on giving advice that relates to this, such as financial products that are intended for those with high incomes or who have a significant sum to invest.

While some people may be able to manage their own finances well enough not to need advice like this, there are plenty of others who find value in working with a professional that can help them make the right decisions about pensions, investing, saving for retirement or the many other areas of financial advice.

Spending time to research and find the right financial advisor.

It’s important to find the right financial advisor for you and your own personal situation. Spending time and doing careful research to find the right financial advisor can be very beneficial in making sure you get the right plans and advice. Some things to consider when researching financial advisors are:

  • Are they qualified to provide advice based on your current situation and needs and do they provide the services that you need?
  • Can you communicate with them easily – do they use complicated jargon, do you find their manner offputting or do you find them easy to talk to and understand?
  • Are they Independent advisers?  Independent advisers are the only ones who can access products across the whole of the market, if not they are referred to as Restricted advisers.  You can find out more in our article on What’s the Difference Between an Independent and a Restricted Financial Advisor.
  • Finding one with whom you can communicate without feeling judged or embarrassed by what your financial situation may be (i.e., if you’re not in great shape financially, it can be difficult to admit that).

How much is a financial advisor in the UK

Financial Advice costs can vary wildly, depending on the type of advice that is needed and how the adviser charges.  Mainly the cost of advice is determined by:

  • The services the adviser provides.
  • The complexity of the work.
  • If it is a specialist area (such as defined benefit pensions).
  • The amount of time the adviser will spend on the work.
  • The location of the adviser; as different parts of the country can result in different costs for the adviser.

Advisers often charge based on a percentage of the funds that you have, although some (such as ourselves) offer Fixed Free Pricing for the work that is tailored to the exact needs of the particular client and the advice they need.  

Are financial advisors worth it?

Whether a Financial Adviser is worth it for you depends on your situation.  Financial Advisors are able to help in many situations and can add value in several ways, from improving investment performance, reducing tax, finding a better pension plan or helping understand what your future is likely to look like.  In some situations, the cost of the advice is outweighed by the improved financial performance, but in other situations, there are less tangible benefits that come from knowing that your finances are arranged in the best way possible and that your future is secured. 

With the potential for a significant gain in your finances, for most people, it is certainly worth exploring whether working with a financial advisor is worth it for you.  Many financial advisers will have an initial talk or consultation for free to help you understand what financial advice can offer, how much it is likely to cost and generally if it’s for you.

How do I find a financial advisor?

The first thing to establish when thinking about financial advice is what you actually want help with and what type of adviser you need, as a financial advisor can help with everything from retirement planning and estate plans to tax planning and insurance strategies.   You can find advisors through referrals from friends or family members, which can be helpful as you are getting a recommendation from someone you trust.  Although not everyone will have the same priorities or value the same type of adviser.  Looking locally and viewing their websites is a good way of getting a feel for how a financial advisor operates.  It can be very useful to look at reviews on places like Google to see what previous customers have said about the adviser.

Are financial advisor fees tax deductible?

Whilst personal financial adviser fees are not able to be deducted from your tax bill, you may be able to receive some tax savings when it comes to financial advice.

Specifically, if any of the financial advice relates to your pension, then you are able to pay for this advice directly out of your pension.  This is possible even if you have not reached the age at which you are allowed to withdraw.  As the adviser can take the payment directly from the pension which has received tax relief, you are effectively getting tax relief on your pension advice.

For example, if you were a higher rate tax payer and decided to pay an IFA £100 for some pension advice, you could pay directly, which would cost you £100 out of your pocket.  Alternatively, £60 contributed to your pension would receive £40 of tax relief, up to a £100 which can be used to pay the Financial Advisor, meaning only £60 out of your pocket directly.

Final Thoughts on What a Financial Advisor is

If you have the feeling that you need help with your finances, then getting in touch with a financial advisor can be a great first step.  They offer a wide range of services, and whilst they may not all have the right service for you there is likely to be one that will.  They can be a great help with many aspects of your finances and help plan for your future and make the most out of what you have.

A financial advisor can help you get on track with your money and feel more confident about your financial future and later life plans. However, it is important to choose a financial advisor who meets your needs, charges a fair price and whom you find trustworthy. You should also make sure that the person has experience and qualifications in the type of advice you want, as they can advise on a wide range of services, from retirement planning, investments, pensions, estate planning, wealth management and much more.

Many Financial Advisers (certainly financial advisers here in Bristol) offer a free initial consultation so you can discuss what you are after and get an idea of what the IFA is like.  There is nothing wrong with approaching more than one to see which one suits you the best. 


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