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Financial Planing

The UK Government Guide to Choosing a Financial Advisor

If finance sounds Greek to you, it is best to seek consultation from a financial advisor. A financial planner is an authorized individual or firm that advises clients on subjects such as savings, investment, and taxation. You can leverage their experience to make small monetary decisions, such as buying a car or set long-term financial goals.
The investment sector is one of the hottest money-making markets in the world. Thus, the market is flooded with several financial advisors. With the evolution of the internet, one can also search for financial planning service online. The multiplicity of service providers is certainly beneficial for consumers. However, this also makes choosing a financial advisor extremely difficult. Some service providers specialize in a specific area of financial planning such as estate planning, taxation or retirement savings. To assist consumers in this daunting task of making the most appropriate selection, the UK government has issued a comprehensive guide on how to choose a financial advisor. Here’s an extract from that guide. What is the Need for a Financial Advisor?
Financial advisors are experts in financial instruments. They understand yield, risk and other factors associated with an instrument. They also have knowledge of terms and conditions related to investments, which are often underplayed by most of the financial organizations. It is difficult for an individual to gain such in-depth knowledge of any financial instrument. Moreover, an experienced financial planner has the ability to judge an individual’s financial requirements. They take into consideration annual income, expenses, the standard of living and potential emergencies for an individual or family to give advice on smart investments. Thus, hiring a financial advisor ensures greater protection of your hard-earned money. What Information Does a Financial Advisor Provide?
The information provided by a financial advisor depends entirely on an individual’s requirement. If a financial planner specializes in a specific type of investment, the information will be limited. In general, you can receive the following information:
Instruments available for investment and associated terms.
The cost of an investment instrument.
Eligibility criteria for investment.
Documents such as an annual statement or payment alerts related to the investment.
Investment tracking report that will highlight the performance of every instrument.
A financial advisor charges on either every investment or annually, depending on your business agreement. Some service providers charge a percentage when an investment matures. The fees vary significantly among financial planners ‘ some financial advisors are commission based whilst others offer a more transparent fee-based structure for remuneration. However, some larger firms may charge high fees for a dedicated fund manager and for portfolio maintenance. How to Search for a Financial Advisor?
Business pages, telephone directories and online search engine results are flooded with the contact details of financial advisors. Interestingly, almost every financial advisor claims to offer a high-return yield at an affordable rate. Established banks also have dedicated financial planning executives. The best solution to this puzzle is to juxtapose different services and make an informed decision.
While juxtaposing different financial advisers check their portfolio, a range of services offered and experience, one should try to judge their understanding of the financial instruments by asking a number of questions. They should promise a consultation on your long term investment goals and not merely be selling financial products.
According to the UK government guidelines, one should choose a Financial Advisor that is regulated by the Financial Services Authority (FSA). This ensures smart advice and safe investments. Also, make sure that the financial consultant has no affiliations with a company selling financial products. To this end, it might be better to hire an independent financial planner with Chartered Financial Planner status. Considering the importance of retirement planning, make sure you seek expert consultation on long-term saving plans such as Individual Savings Accounts (ISA).
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