What is the role of a financial adviser?

General advice 25 June 2016

There are a few points throughout life where we need to make some big decisions about our finances.

This could be when buying a home, inheriting a large sum of money, or looking to sort out your pension or retirement income.

Financial advisers are key to making sure you get the most out of your money in these situations.

Some people will use advisers for these one-off events, and some will swear by the services of an financial advisers throughout their lives, and it’s important to understand exactly what financial advisers do – and what they can do for you.

You can also see our other blog that tells you how financial advisers make money.

Financial advisers can help you in the following ways:

• Financial and tax planning – As you increase your money and assets, financial planning can become increasingly complex. With so many products on the market, many of them being tough to understand, a qualified financial adviser can be invaluable, and really worth their service fees.

• Investing – Investing can bring with it some serious risk, but it can also be a great way of generating additional income. An financial adviser will be able to produce a risk profile: this will see how open or averse you are to risk, and can then invest your assets accordingly. The higher the risk, the better your returns will be, but you could lose out, too.

Once you’ve got your risk profile, your financial adviser will be able to guide you through the investment process with personal recommendations.

• Mortgages – Buying a house is a huge financial milestone, so an financial adviser can help to ensure you’re getting the most out of your money, and also make sure you’re financially stable enough to pay for it.
You’ll likely be offered financial advice from the mortgage lender, but remember that this is restricted advice, meaning they will only recommend certain financial products (in this case, usually their own).

• Protection Insurance – there are a number of more complex insurance products available including life insurance, critical illness cover and income protection. Because of the complexity of these products, a financial adviser can help to make getting a covered a whole lot easier. It can be done cheaply without the use of an adviser, but if you’ve got complicated family matters, or health issues, the cost of using an adviser can be irrelevant to ensure you’re properly covered.

• Pensions – Choosing a pension can be as simply as being enrolled in your workplace’s pension plan. But there are more involved pension plans that could lead to greater returns in retirement; an financial adviser can help you with choosing these products.

A financial adviser is also extremely useful when using your pension to secure a retirement income, whether you want to buy an annuity, take a lump sum or enter income drawdown.

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