Forking out for financial advice might seem counterintuitive if you’re trying to grow your savings, but there’s plenty of evidence to show it could be one of the best investments you ever make.

If you don’t know your annuities from your equities, and don’t have the time (or the inclination) to get to grips with financial jargon, you might decide you want an advisor to talk you through all the options available to you.

A financial advisor can manage your savings, investments and pensions on your behalf and let you know what you need to do to ensure you’re on track to meet your financial goals, whatever they might be. Their role is also to maximise your returns, and research shows that advice can add real value to your financial circumstances over the long term.

Here, we explain how a financial advisor might be able to help you, how much you can expect to pay, and how much value they might add.

What do financial advisors do?

Financial advisors can offer advice on a wide range of topics, including pensions, life and protection insurance, mortgages and equity release, as well as financial and tax planning.

Most financial advisors specialise in a particular area of financial advice. This means if you need help with mortgages or equity release, for example, you will be best off finding a specialist mortgage advisor.

If it’s pension advice you need, then you’ll need a financial advisor who specialises in pensions. Find out more about this in our guide How to get advice on your pension.

You will have to pay if you want pension advice from a financial advisor, but you can get free pension guidance from the Pension Wise website. This was set up by the Government to offer free and impartial guidance to people with defined contribution pensions.

Advisors will either be ‘independent’, which means that they’re able to advise and sell products from any provider right across the market, or ‘restricted’, so they are limited in the products and providers they can recommend to you.

If you’re not sure which type of advisor might suit you best, read our article How to find the right financial advisor for you.

If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.

The consultation is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

How much does financial advice cost?

There’s no escaping the fact that professional financial advice comes at a cost, so if you’re keen to proceed you’ll need to be clear on exactly how much you’ll have to pay and whether you’re comfortable with these charges.

Financial advisors will usually offer you a free initial consultation, during which they should explain their fees, along with what they’ll do to earn them.

Fees can be charged in several different ways. For example, you might be charged an hourly fee, which can typically range from £30 an hour to in excess of £200 an hour. This option might be worth considering if you only want one-off advice on a particular subject.

Some advisors offer a flat fee instead, that will cover the cost of a particular piece of work, regardless of how long it takes.

Alternatively, you might be charged a percentage of the assets you want to invest. A recent review into financial advice conducted by the financial services regulator The Financial Conduct Authority (FCA) found that for advisors charging in this way, the average initial advice charge was 2.4%, equivalent to £480 for someone with £20,000 to invest. There’s typically a further average annual ongoing advice charge of 0.8%.

Bear in mind that if you are looking for mortgage advice, you may not have to pay for this advice at all, as there are several fee-free brokers to choose from. Rather than you paying them a fee, brokers instead receive commission from lenders on any products you take out.

If you’d like to find out more about how mortgage advice works, you may find our guide Should I get advice on my mortgage? helpful.

What is the value of financial advice?

Although the cost of financial advice can seem steep, according to research conducted by life, pensions and investment company Royal London and the International Longevity Centre, in the space of just 10 years, customers who had sought financial advice were, on average, £47k better off than those who chose to go it alone.

Those who fostered an ongoing relationship with their adviser were up to 50% better off than those who had only received advice once. Interestingly, the analysis showed that the financial benefits of advice for those of modest means were greater than for those customers who were considered to be affluent. Over the 10 year period, the ‘just getting by’ group who took advice ended up an average £50,332 richer overall than those who didn’t seek advice. Those falling into the ‘affluent’ category who sought financial advice ended up on average £43,353 better off than those who didn’t take advice.  You can read the report here.

A separate independent study by Vanguard found that those with a financial advisor typically earned around 3% per year more than those without an advisor.

As well as the financial benefits, seeking professional advice can also help build financial resilience. A separate survey conducted by Royal London found that 44% of those who received advice said they felt prepared to deal with financial shocks compared to 32% of those who had not been advised.

Sarah Pennells, head of financial capability at Royal London, said: “We know that taking financial advice will have a positive effect on your financial wellbeing but what is less well known is how it can improve our emotional wellbeing. The fact that taking advice makes people feel more able to deal with financial shocks is particularly important in these current times. We all need to do more to ensure people know what to expect from receiving financial advice and the benefits it can bring.”

There are time savings to consider too. A financial advisor can do all the legwork and research on your behalf, helping track down the investments that are right for you and reviewing them regularly to make sure they are still a good fit.

Another benefit is that if you’re recommended a financial product which turns out to be unsuitable, you may be able to claim compensation for ‘mis-selling’. Bear in mind, however, that if an investment you’ve been recommended performs badly because markets fall rather than rise, you won’t be protected against losses.

Book your free pension review

If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified local advisor give an unbiased assessment of your retirement savings.

Book my free call

What sort of advice do you need?

If you’re considering seeking financial advice, you’ll need to think carefully about what exactly you need. For example, you might want advice to help with something specific, such as consolidating your pensions or finding a mortgage, or you may need ongoing support, perhaps because you’d like someone to monitor and select your investments on your behalf indefinitely.

If you think you just need to be steered in the right direction and don’t need specific recommendations and advice, you might decide to consider a robo-advice service. Despite their name, these services can only really point you towards a portfolio of investments based on the information you’ve provided them with – it’s ultimately you that chooses what to buy. Unlike a human financial advisor, they almost certainly won’t help you with things like tax planning or working out how and when to take your pension. Find out more about how this type of service works and the costs involved in our guide What is robo-advice?

Where to find financial advice

If you’ve got trusted friends and family who you know have used a financial advisor to advise them, ask if they would recommend using them, as word of mouth is always a good place to start.

You can find a local financial advisor on VouchedFor or Unbiased, or for more information, check out our guide on How to find the right financial advisor for you.

If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.

The consultation is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.

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