What does a financial adviser really do for you?

Hayley Millhouse - Managing Director, OpenMoney Adviser Services

August 6, 2019

  • What is a financial adviser?
  • What are they really doing for you?
  • What do they charge?
  • Are they worth the money?
  • And do you really need one anyway?

A financial adviser is someone who can help you achieve your financial goals.

They can create a financial plan for you, based on your circumstances; taking into account what you want to achieve and how much risk you’re willing to take.

Their plan will lay out what you could do to help achieve your financial goals, whatever they may be. An adviser should let you know if your goals are realistic for how much risk you’re willing to take.

They should then monitor your savings and investments to make sure they are still suitable for you, and regularly review your goals and progress.

But for that they will typically charge you 2.5% (according to a study by Grant Thornton, Aug 2016) of all the money you have invested - every year.

What are you paying them for?

2.5% annually might not sound like much, but it can quickly add up. For this fee someone putting away £200 a month for 20 years could pay charges of more than £15,000 during the life of their investment.

So, if you’re thinking of investing, the big question you need to ask yourself is, ‘are traditional financial advisers really worth the money’?

A traditional financial adviser may tell you that their expertise and experience will help to ensure you don’t end up investing in an unsuitable product or one that gives poor returns. And it’s true that some advisers can help you access investment opportunities that aren’t readily available to the general public.

It’s also true that investing with a financial adviser means that you could be protected if things go wrong – as long as your adviser is approved by the Financial Conduct Authority (FCA), the body that regulates financial services firms in the UK.

But the reality is that consumers are paying fees of at least £1bn a year to financial advisers for investments that don't perform any better than far cheaper alternatives.

Some of the time, advisers just put an investor’s cash into passive investment funds, which simply benefit from the natural growth of the stock market and require absolutely no effort or active management on their part!

That said, investing with no advice means you run the risk of making the wrong investments, which could cost you a lot of money in the long run.

Thankfully, there is a third way.

What does a financial adviser really do for you Content 1

Best of both worlds

At OpenMoney, our team of qualified financial advisers have designed an advice platform which uses algorithms to create personal recommendations for our customers.

By supplying some straightforward facts about yourself, including things like your goals, your earnings, your assets and your attitude to risk, we can build an accurate profile of you and provide you with a personal recommendation, which will let you know which of our products and funds are suitable for you.

We’ll always be honest with you – if we think you could be better off paying off your credit card or loans, we’ll tell you.

Even if that means you don’t invest with us.

Our use of algorithms helps keep our costs down, so you will never be charged more than 0.5% every year – which could save you many thousands of pounds over the lifetime of an investment.

But, crucially, we always have human expertise on hand to answer your questions and guide you along your investment journey.

With a traditional financial adviser you’ll be lucky to see them once or twice a year, but at OpenMoney you can book as many phone or Skype appointments as you like with our advisers at no extra cost and at a time convenient for you.

And we are authorised and regulated by the FCA too, so you can feel confident that we are treating our customers fairly.

To see if investing is right for you just answer a few questions on our website.

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