20th January 2020
As of March 31st 2020 new Central Bank of Ireland rules will mean that only a financial advice firm that does not receive commissions from sales of products will be entitled to state they are an ‘Independent Financial Advisor’ in Ireland. These firms (of which Informed Decisions is one of a handful in the country), will be entitled to use the term ‘Independent’ in describing their service. That will see quite a few firms which currently use the term Independent having to get websites altered and cabinet-fulls of marketing materials re-printed. It is intended, I understand, to help consumers more easily identify what type of advice they are likely to receive, based on the firms’ description. I’ve said it before and I’ll say it again, there are hundreds of really great advisors in Ireland – irrespective of what title they go by. You and your financial future stand to do far far better with even an average advisor than with no advisor – that fact has been proven time and time again.
Anyway, back on track, this week I hope to share with you 5 signs that suggest you need to engage an Independent Financial Advisor. The 5 signs that I am about to share, while I might like to think so, is not an exhaustive list, and is based on my own experience working with valued clients directly, and also with Independent Financial Advisors across the country. Everyone will have their own individual motive and driver for seeking financial advice, but the following will perhaps help guide you if you find yourself with one of these headaches.
If you do have one or a combination of these headaches, then perhaps my Blog 27 of almost 3 years ago is utter nonsense in your case, and you should totally and completely ignore what I wrote back then!
So, in no particular order:
You may already have help – in which case you are hopefully getting the support you need to aid with any of the above headaches. Happy Days. If you do not, then you may benefit massively from getting the right help. The results and benefits can be as much or more emotional or psychological, than financial, and that’s often something that money can’t buy!
How Much Does Independent Financial Advice Cost?
In Blog 121 last year we shared the average fees on pensions and ARFs etc. We previously spoke about the Dept of Social Protection’s research that the average all-in fees on pensions across the country are north of 2% per annum when you include the undisclosed and hidden fees. What never ceases to amaze me is that people with large assets, investments and retirement plans are typically paying in and around that 2% figure, but yet do not receive comprehensive financial planning as part of the deal.
When they bought the product they had a need, the product may or may not have satisfied that need, they pay the 2% (give or take) on those assets every year – and get bugger-all for it beyond a 6-monthly investment statement and an annual chat to update them on the performance of the investments. That is not financial planning, that is investment management, and is certainly not worth paying 2% per year for – not in any cartoon, as my friend likes to say. Do not ask an investment manager to help you with your financial planning (nor should you ask an accountant to help you with you financial planning – that is not what they do, believe me!). Investment management and financial planning are two distinct and very different services.
Surely it is a great outcome for that individual if they can get the same investment solution, or perhaps even a better solution, PLUS the added benefit of an Independent Financial Advisor to help them with all aspects of their financial planning, for the same of indeed a lower overall price!? That’s where the value comes into play, and why people are starting to see the wood from the trees, and are more and more seeking Independent Financial Advice. That is where they can get the investment management (which is all but commoditised in today’s world), the financial planning, the legal and tax planning, the business planning and the on-going counsel and support. The coaching to help walk you off the financial cliff when the next market declines hit us all. If that aint worth 1-1.5% per year then nothing is.
A client recently moved to work with us – previously they were paying 1.9% per year on money they had invested in both pension and company investments. For that 1.9% they were getting an annual statement and an occasional phone call from the investment managers to see if they had more money to invest – and literally nothing else. Nothing else. They were paying north of €20,000 per year in investment fees – for that! They now get far more value; better and clearer investment strategy, a clear financial plan for the next 2 to 3 decades and a logical spending and draw-down strategy. Ultimately they now have the confidence to do what they had previously been afraid to do; to cut back on their hours, to spend their money and enjoy themselves! They now have someone who is on their side, who can provide support across major tax, investment, retirement planning, and who is totally vested in them reaching their goals over the next 20-30 years. Plus, they are paying a little less than they were previously!! Win-Win surely. (We really need to revise the company fee structure!)
Bottom-line, I believe in what an Independent Financial Advisor can do for people. It is not perfect, same as any profession – but the value that can be had from it is nothing short of life-changing. It is for that very reason I am deliberately giving the best of my working years to helping people to benefit from it, and encouraging other financial advisors to focus on the people and the planning, and not the products.
Speaking of planning, there are a handful of tickets still remaining for our inaugural Seminar on 8th February – you’ll be out voting anyway, so may as well swing by the lovely 5-star venue and pick up some nuggets that will save and make you thousands over the coming years…..all info here.
Thanks for reading,
Paddy Delaney QFA RPA APA
If you seek a source of trusted, truly independent expertise on your investments, pensions & financial life, we can help.