16 July 2012

The Value of Advice

I'm always keen to make sure that my clients get good value when paying for financial advice.

That ideally means that they can see how much better off they are having paid for advice than if they hadn't. Often that is easy to see looking back but is not so easy to be sure about beforehand! Offering "guarantees" is a bit of a "no-no" in the financial world and you can't always be sure what the outcome will be in any case. But on the other hand it can be quite easy to demonstrate in retrospect.

As well as being financially better off, financial advice clients often receive other benefits, including being better protected by insurance, being more confident that they are doing the best for themselves, or reducing the likelihood of a large Inheritance Tax bill on their death, ... to give a few examples.

Here's a list of some achievements (2011) which I included in a recent newsletter. Clients are real but I've changed their names:

Tim and Sarah got 30% more pension income by taking advice, rather than just taking the annuity offered by their pension provider.
Payment from a Critical Illness policy was beneficial to John. After a heart attack he was able to pay off his mortgage.

Paul retired earlier than he had expected. We were able to show him that taking his final salary pension early was worthwhile in the long term, even though the monthly income was lower.

The value of Mike’s investment immediately increased by 25% when he made a lump sum pension contribution, thanks to tax relief.

Clive and Hannah ensured that they would pay less tax in future by moving some existing investment funds across into their ISAs.

Tom and Penny are retired - they increased their income by moving a matured National Savings investment into funds paying an income.

Damian and Carol are still working, and don’t expect to call on their investments just yet. They put aside a lump sum for up to six years in a “kick-out” structured product. They expect a good return in due course (11% per annum).

Philip and Edith are uncomfortable with their investments going up and down too much. A product with a guarantee ensures that their investment will never be worth less than 90% of the amount invested.

Gareth and Sally are not far off retirement but had accumulated various savings and investments which were under-performing. They consolidated onto a platform in ISAs and a new pension plan.

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