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7 costly mistakes people make when choosing a financial adviser

We look at some common pitfalls when choosing an adviser and explain how our approach can help avoid them.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Bruce Pearce

Published on 23 January 2020

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

What does the next chapter hold for you? You may be planning a round-the-world trip to celebrate your retirement. But, you may also be thinking about more practical things like estate planning and reducing your tax bill. Whatever the future holds, an adviser can help give you a stable financial platform to make it happen.

The future is a big thing to put in someone else’s hands, so getting the right adviser is essential.

Here are the main things people can get caught out by when they choose one:

#1: Succumbing to a good salesman

Selecting an adviser based on how good a salesman they are usually results in being sold something that isn’t quite right for your circumstances.

HL financial advisers act as ‘coaches’ and help you understand your options so that you can make a calm, informed decision and really make sure that the fit is right. We check your portfolio and your attitude to risk to determine if you are in the right products and investments.

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#2: Underestimating the effect costs have on investment returns

The cost of advice can be off putting but in the long-run the right adviser can save you money and help you make those big decisions. As with anything it’s always good to shop around and be sure that you are paying only for what you need.

Our costs are amongst the most competitive in the industry with investment advice typically costing 1-2% of the portfolio value subject to a minimum of £495 + VAT. Plus, our flexible approach means you only pay for the advice you need and we won’t lock you in to ongoing review fees.

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#3: Not taking stock of your assets

The first step in all financial planning is to know where you are right now. Many advisers charge you simply to bring your affairs into order so that you can see where you are.

We make it easy to get you up and running with guidance and it usually costs nothing to get set up on our platform, so you can see all of your investments in one place. We'll also show you where to find our favourite investment ideas, and our expert research to help you make your own decisions.

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#4: Not checking the adviser's background

There are many excellent financial advisers who can help you plan your investment strategy and prepare for your retirement. Placing your valued trust on one person to make the right decisions with your money is a big deal.

Unfortunately, unscrupulous advisers do exist. As well as those who just lack a little empathy, shall we say. It’s important to check their background. Ask for their profile, with details of their experience, qualifications and specialist expertise to see if they fit your needs.

#5: Not asking for references

We all feel more confident about making any type of decision or purchase if other people have and leave positive reviews. Financial advice should be no different.

A good adviser will have a plethora of references from happy clients, and should have them readily available for you. Read our adviser profiles which include quotes from their clients.

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#6: Blindly following advice

Your financial adviser is working for you. It’s your money and you should have the final say. If you’re uncomfortable with anything, make sure you ask more questions.

Some great questions to ask are; how will I benefit? Is this too risky or too safe for me? You want an adviser who is open to this type of discussion and you want to ensure you understand how the recommendations they make are right for you.

Our advisers would never rush you to make a decision and they certainly wouldn’t implement anything you were uncomfortable with. Never be afraid to challenge your adviser.

#7: Assuming you need advice without being sure

Often advisers work alone or for firms where they are able to offer only financial advice. At HL we can help you with or without advice, and we will direct you to the service that is most suitable for you.

The first step is always to determine whether you actually need advice and will benefit. If after talking to us and it is clear that advice may not be the right path for you, we provide free information to allow you to manage your investments yourself.

If advice sounds right for you, we'll set up a free initial meeting with a financial adviser.

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Why choose us?

Our financial advisers are carefully selected because of their ability and comprehensive knowledge of investments, as well as their understanding of the preferential tax treatments available. You can be sure they are here to help you make the best investment decisions.

Providing peace of mind – giving you the assurance that investment decisions are right for you. They will also help guide you through volatile markets and give you confidence about facing the future
Saving time now and in the future – an adviser does the work so you don’t have to, and can provide a comprehensive financial plan for you to follow. Should you need help again in the future, we’ll be there to offer a helping hand.
Only pay for advice you will value – we’ll only recommend advice if we think you will financially benefit. If we don’t think you will, we will help you make your own investment decisions
Shelter more from the taxman – an adviser will ensure your affairs are as tax efficient as possible and shelter more of your money from the taxman
Improve potential returns – an expert can quickly assess whether you are getting the best return for the level of risk and ensure that your investments are best placed to meet your objectives

Find out if we are right for you - it costs nothing and there is no obligation to use our service

Initially our advisory helpdesk will help you determine whether you actually need advice, for many clients we provide information to assist with managing their investments without paying for advice.

If advice sounds right for you, we'll set up a free initial meeting with a financial adviser. Please note that if you decide to proceed, charges will apply. Typically no advice will be given during the initial meeting and if you decide to take advice these are usually 1-2% of the portfolio value subject to a minimum of £495 + VAT.

It should be remembered all investments can fall as well as rise in value so you could get back less than you invest. Tax rules can change and benefits depend on personal circumstances.

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