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Why everyone needs expert financial advice
By Jill Kerby
Personal Finance Journalist
We don’t perform surgery on ourselves or extract our own teeth, they say only fools represent themselves in court and yet we make some of the most important and expensive financial decisions of our lives, without ever consulting a financial expert.
We’ve learned to our cost in Ireland, that overloading on property-based debt can produce not just disastrous outcomes for individuals, but an entire nation.
Even everyday things like buying the appropriate home insurance have led to serious financial hardship for thousands across the country, simply because people don’t always know what they’re buying.
In this case, the unfortunate homeowners will deeply regret not just the flood damage, but not taking informed advice.
Financial advice should be personal
Expert advice is centred on ensuring you get what’s best for you. A financial advisor can help you connect the dots between a good plan and the right products – all with an impartiality that’s impossible to achieve on your own.
And, if your personal circumstances or the markets hit a wobble, they can provide the calming rationale you might need to turn things back around.
If we’re lucky, our first lessons in the art of money management start in childhood.
We’re given a piggy bank for pocket money and in time, it’s transferred into a child-friendly savings account in the post office, credit union or local bank and the life-long ritual of saving begins.
By the time we start earning our own living, we’ve hopefully managed to open a current account or arrange a small personal loan, without making too many mistakes.
Yet, under time pressure and most likely transacting online, how many of us shop around for the best terms and conditions when it comes to financial products?
It’s fair to say, the average young working adult will now spend more time researching their next smart phone than their first pension, despite the fact our financial lives are becoming more complex.
That’s something we really need to redress.
Financial decisions deserve our time and attention
A cavalier approach has no place when it comes to 30-year mortgages, insurance that protects the people and possessions we value most, and pensions that determine how we will spend the last quarter of our lives.
How many people fully understand the asset allocation that sits behind their pension, how tax relief works or even how to claim their retirement income come the time?
Very few is my guess, but here’s the thing…that’s okay, provided you get the advice you need.
Be planned and be practical
The earlier you strike up a relationship with a good independent advisor, the better.
That might be when you join an occupational pension plan, start investing, get married or buy your first home. And of course, starting a family will take you into a whole new world of financial challenges.
Good financial advice can help with all of that.
At its most basic, the role of an investment advisor is to create a realistic plan that will help you reach your financial goals. They can help get you there too, with practical advice on how to increase your income, budget better, invest wisely and sense check your spending priorities.
One of the greatest dangers of taking a DIY approach is that you never get an objective view of your financial position that includes all the bells and whistles, like income, tax, spending, saving, debt, assets and liabilities.
There’s no synergy between piecemeal actions and as a result, you end up reacting to events rather than planning for them. That means you’re also more vulnerable to short-term crises and run the risk of getting sucked in by headlines and hype.
With a neutral, informed voice at the other end of the conversation, you’ll be reminded there’s a tailored plan in place, allowing you to remain focused, resist the temptation to take unnecessary risks and make better financial decisions generally.
Now, what part of that doesn’t make sense?