Know when to get advice
When it comes to financial DIY, it’s not quite so straightforward. Often, the decision to take advice or go it alone comes down to factors such as your confidence, the complexity of the product and whether you’ve got the time to do the research. So looking at the main financial products – when is professional advice essential and when isn’t it?
Unless you have a vast amount of money or you really can’t be bothered, sorting your savings is something you can do yourself quite easily. Comparison websites, such as moneyfacts.co.uk and our own comparison tools take all the legwork out of the job, allowing you to specify the account you want and how much money you’ve got to put away.
Advice is more important when it comes to your pension, especially if you’re looking to transfer schemes or consolidate some existing pension pots. Working out whether it’s worth moving a scheme can be complex, as you need to take into consideration things like transfer values and future benefits.
There are times when you can do it yourself though. For example, if you’re after a simple stakeholder scheme to kickstart your pension, there’s not much difference between the providers and you can transfer easily if you want something more sophisticated later on.
Comparison websites mean it is possible to sort your mortgage out yourself, but it can be a long and sometimes stressful process so you might want to hand it over to an adviser.
As well as overseeing your application, they’ll be able to access deals you wouldn’t be able to get on your own. They also know which lenders are more likely to accept your business.
Taking out the right protection is important, especially as you might not realise you’ve got the wrong cover until you make a claim. So, although it’s possible to find the cheapest deals through comparison sites, an adviser will make sure you take out the protection you need. On top of this, because of the complexity of this area of the market, several insurers only deal through advisers. Going it alone would mean forfeiting the deals they offer.
Whether or not you use an adviser to help construct a portfolio is a matter of confidence. Fund supermarkets and discount brokers provide loads of investment information to help you make your selections. On top of this, many have online tools that enable you to check your asset allocation and assess the risk in your portfolio.
But, while these are useful tools, if you’re an investment novice you might want someone to help you as you take your first steps. An adviser will make sure that investing is right for you then work out your risk profile and put together a suitable portfolio for your investment objectives.
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.