Financial Advice versus No Financial Advice

If you’re looking to invest, buy a financial product or plan for the longer term, whether or not you need financial advice will depend on a number of factors such as what product you are looking for, how complicated your finances and personal circumstances are and your short and long-term goals.

What do you pay for financial advice?

Many advisers offer a first consultation for free. If you’re not sure if you need advice, why not make an appointment to find out what they can do for you?

The rules on fees for financial advice changed from 31 December 2012. If you are looking for general financial planning advice or for advice on buying particular investments you will pay a fee. Advisers must be clear upfront about what their fees are and agree with you in advance how you will pay them.

Is it cheaper to buy without advice?

You won’t have to pay an advice charge if you go direct. But you should weigh up the cost saving against potentially buying an unsuitable product or one which gives poor returns.

Advice can help you buy a better product than one you choose yourself. An adviser will also have the expertise and knowledge to find better options, as some  products are only available if you go through an adviser.

So when do you need financial advice?

The answer partly depends on the product and partly on other factors.

Cash savings products

If you’re looking to put money into savings accounts, or fixed rate savings bonds it’s easy to DIY using comparison sites and tables. Because of the low risk you don’t need to get financial advice and you can buy directly from providers very easily.


If you’re thinking of investing in shares, unit trusts and other investments, you can go DIY but it will be more risky because these products are harder to understand than savings. There’s also a risk that you might lose money or buy a product that’s not suitable for you because you don’t understand it. So you really need to do your homework.

Ask yourself these questions:

  • Do you have the time to do the research?
  • Do you have much experience, knowledge or skills when it comes to investing?
  • Can you afford to lose any money?
  • If things go wrong, are you comfortable taking responsibility for any bad investing decisions?

If the answer to any of these is ‘No’ then seeking financial advice may be your best option. When trying to decide, also bear in mind the cost of fees against the financial and emotional cost of getting it wrong if you buy without advice.

What are the benefits of getting advice?

If you buy based on financial advice and a recommendation, you should get a product that meets your needs and is suitable for your particular circumstances. Depending on the type of adviser you use, you may also have access to a wider range of choices than you’d be able to assess realistically on your own. You also have more protection if things go wrong if you buy based on advice – see below.

Insurance or mortgages

Some insurance products and mortgages can be purchased using price comparison websites, or bought directly from suppliers. However, there are also plenty of specialist brokers who will talk you through a range of options and may be able to get you a better deal. It’s up to you whether you buy with or without advice.


If you’re looking to invest in a personal pension, to boost your existing pension or to merge different pots from existing pensions it’s usually best to get advice unless you really understand how these products work. Pensions are long-term investments so you need to be sure you understand the types of fund you’re investing in, the risks and the suitability for your particular situation.

Managing Investments

If you think you can manage your investments on your own, answer these questions, then decide if you should get a second opinion. Remember, a financial advisor has the time, knowledge, research tools, expertise and experience that you may not have. After all, investment planning is his or her full time job.

Answer These Questions

  • Have you utilised asset allocation effectively?
  • Do you know enough about all the individual stocks, bonds, and managed funds to choose your investments wisely?
  • Is your investment portfolio diversified enough to give you the best potential results?
  • Do you have enough time to review your investments periodically to determine if you should reallocate your investments?
  • Have you spoken with a tax advisor to determine if you’re getting the most out of your investments?
  • Are you secure enough with your investments to “stay the course” even in changing market conditions?
  • Is your investment portfolio overweighted in a particular stock, sector or asset class?
  • Do you think you can effectively “time” the market by always buying low and selling high?
  • Are you taking advantage of the power of compounding?
  • In case of an emergency (loss of job or sudden medical expense), do you have enough cash on hand to pay your bills without having to cash out at a lower price?
  • Are you aware of the constantly changing tax laws and how they can impact your investments?
  • Have you considered taking advantage of dollar cost averaging?
  • Are you able to take advantage of both taxable and tax-exempt investments?
  • Do you understand how economic factors such as interest rates, unemployment, housing sales, inflation and productivity impact the economy, the stock market and your investments?
  • Will you be prepared to pay for your children’s education and your retirement?

If you answered “no” to a few of these questions, perhaps you should consider working closely with a financial advisor to help you make the most informed investment choices for your personal situation.