What you stand to lose if you don’t use an IFA

Almost a third of the population cannot see a way they would benefit from visiting a financial planner, according to a recent poll by the Institute of Financial Planning (IFP). This follows an FE Trustnet poll that suggested the majority of those that do have an IFA visit them less often than once every two years.

However, if investors want to save for their retirement, get a better deal on their mortgage or become more tax efficient, going to see an IFA is the only sensible way.


Safe-guarding your investments

Kerry Nelson, managing director at Nexus IFA, says that making that first trip to a financial adviser could be all it takes to guarantee your financial future.

"It is too tempting to put off financial planning but it is one of the most important things you can do. It is our job to make sure you are in the best financial shape for the future," she says.

"In the UK alone there are over 3,000 investment funds available. Consumers cannot expect to have knowledge of any but a handful of these and will not be able to tell the good from the bad and the ugly. An IFA spends their lifetime researching the different products and how they relate to one another and, in addition, understands the rules and regulations that surround them."

"IFAs also have a wealth of contacts that they have built up and can get access to areas of the market that is not available to the consumer. This network can deliver much better rates to the client than they would expect to get going it alone."


Being tax efficient

Britons are set to gift £13.5bn unnecessarily to the taxman this year, according to Unbiased.co.uk’s 19th Annual Tax Action Report.

Karen Barrett, chief executive of the website, says that tax planning is the main area where an IFA’s expertise comes into its own.

"Significant amounts are being wasted across all of the tax categories which could so easily be avoided by people taking action and putting some basic tax planning in place," she said.

"While consumers are increasingly aware of saving money by switching utilities providers or using online money-saving websites, they could actually be saving themselves even more by being tax efficient and not giving away more than they should to the taxman."

"Tax can seem a complex issue for many, and even more so in the current economic environment as people look closely at their finances. An independent financial adviser can advise on your financial position and ensure that you are being as tax-efficient as possible."


Independence

Sue Whitbread, head of communications at the Institute of Financial Planning, says that going to see an independent financial adviser is the best way to get a balanced portfolio of investments.

"What you get with an IFA is independence," she explained. "With no allegiance to one specific provider, IFAs have no obligation to recommend one product over another and so can assess which product is right for you from across the entire range available to retail investors."

"Consumers need to ask themselves when thinking about going to the bank or building society for financial planning why they would restrict themselves to a limited range of products."


Building a relationship

Whitbread explains that one of the most rewarding aspects about having a professional adviser is that they take the time to understand what consumers really want their money to do for them.

"The best professional planners will take the time to really understand what investors are trying to do with their money and balance the risk they take in their portfolio accordingly," she said.

"If for example a client comes and says they have £50,000 they want to grow through investment, the best IFAs will find out what the money will be for, what other assets they own and whether they can afford to take risk."

"A client planning for a child’s future, for instance, might want to safeguard that with a lower-risk investment than someone who is simply trying to live a more affluent lifestyle."