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Wealth Advice

Do you need wealth advice?

What is wealth advice?

Do you have funds to invest?

Do you need a wealth advisor?

Or to put it another way:

Have you got funds available now? (Or in the near term future) that you want to grow into something bigger?

If so, you may indeed need wealth advice!

But even with some investable funds, the very first question is: 

‘How Much Do You Have?’ 

£10,000?

£100,000?

£1,000,000?

£10,000,000?

More?

What you have available to invest will determine the type and level of advice you may need.

Do You Need Wealth Advice?- Free Advice?

Firstly, before I give an overview of the types of wealth advice available, we must look at the ever abundant and confusingly plentiful supply of ‘FREE ADVICE’.

The internet is awash with an insatiable supply of informative yet confusing, conflicting yet comforting, attention grabbing yet vague ‘FREE ADVICE’.  

But so called ‘FREE’ advice may end up being the most expensive advice you ever receive.

Why?

Because if you decide to act and take decisions on poor and/or misleading  ‘FREE ADVICE’ you could ‘lose your shirt!’ or to put it another way – lose your investable funds.

Recent examples of how very damaging ‘FREE ADVICE’  can be are how social media platforms such as Facebook have been put to good use by unscrupulous crooks offering ‘amazing’ returns with mini bond ISAs’. 

There have also been countless pension related scams which leverage some type of ‘FREEBIE’ whether that’s a ‘FREE pension review’ or ‘FREE pension evaluation’.

That’s not to say that all ‘FREEbies’ are  ‘scams!’. 

A great example of a genuine ‘FREEbie’ is our ‘FREE’ guide on ‘Pension Scam Prevention’ (Written by a qualified pension specialist).

Wealth Advice – What is Wealth Advice anyway?

So, with the ‘FREE’ side of things out of the way lets take a look at the types of legitimate advice available.

These include:

  • The Regulated Financial Advisor Market

  • Non-regulated (guidance)

  • Financial Coaching

  • The Wild West

 

“Advice is what you get when the person you are talking to wants to revel in the superiority of his or her own intelligence. IF you weren’t so stupid, after all, you wouldn’t have your stupid problems”

Jordan Peterson – 12 Rules for Life – An Anecdote to Chaos

 

Whilst Jordan’s statement seems a little harsh, and could relate to any type of advice; the essence of the message resonates with many. 

But why should we feel that way?

Especially with something so important as financial advice. Therefore, as a starting point any type of ‘financial’ advice should be formulated to improve your knowledge and assist you with making a better informed decision.

 

The Regulated Financial Advisor Market

 

Financial advice (in the UK anyway) is strictly regulated by the Financial Conduct Authority (FCA).

Those providing advice must be appropriately qualified and authorised by the FCA.

Huge improvements (which are ongoing) have been made to the financial advice regulatory landscape.

Much of the ‘incentive’ driven culture that had led to far too many financial advice scandals, mainly around the ‘suitability’ of advice have been removed.

Moreover, a clearer distinction is now made between information and advice

Furthermore, advice is either ‘restricted’ advice or ‘whole of market’ advice. 

Then a further distinction is made between advice which is ‘streamlined’ advice such as ‘focused’ or ‘simplified’ advice.

To emphasise here, if you’re seeking professional financial advice you must only engage with an advisor who is qualified and authorised by the FCA. 

If they’re not then they’re unable to advise you.

Full stop. 

 

Non-Regulated Guidance

 

If you have ever visited some of the government backed finance websites such as ‘The Money Advice Service (MAS)’ or ‘Pension Wise’ you will have experienced what non-regulated guidance feels like. 

Matter of fact and a feeling of emptiness.

Impartial information is provided with the aim to inform and not persuade.  

Unlike regulated advice, non-regulated guidance cannot provide specific recommendations.

As mentioned earlier, the FCA makes a clear distinction between regulated financial advice and financial guidance.

If general information is given and it’s non specific it’s guidance; but if a specific recommendation is made, it’s not. That’s a personal recommendation. 

A personal recommendation means that FCA Conduct of Business (COBs) rules must be adhered to.

Confused?

Take a look at the example below for clarification:

 You are told:

“Based on your circumstances and our evaluation I recommend you invest the whole £50,000 in XYZ shares”

 

This is specific and would be financial advice.

Whereas:

“Further to our discussions the cryptocurrency space could be a place to invest in for the future”

This is general information and non-specific so would not be financial advice.

And of course you’re very unlikely to come across a regualted financial advisor praising the benefits of the cryptocurrecy space!

The difficulty is that information and guidance are….information and guidance!

Something to keep in mind.

Just because the general information isn’t advice it could be bad guidance and risky.

Guidance may fail to take into account your unique circumstances and ultimately lead to action or inaction that isn’t in your best interests.

And crucially, will the information or guidance enhance your wealth?

So whilst in a regulatory sense definitions of advice exist, it is still up to you, how and what information/advice you absorb.

At  WealthXplosion we call this ‘being mindful of your own self interests!

 

Wealth Advice – Financial Coaching

‘Coaching’ has become increasingly popular in many areas of life and financial coaching is no different. Many coaches offer a broad approach to financial planning and goal setting.

This is mainly driven by the the increasing understanding of how behavioural biases influence us and our decision making processes.

Coaching tends to focus on very personal aspects of our lives in order to gain a better understanding of our emotional drivers. 

Caution is urged with any type of coaching and as a minimum any coach should have recognised qualifications from an FCA approved organisation. Otherwise, there’s the danger that your financial coach is a fraudster, and that may be costly.

Wealth Advice – The Wild West

 

Are you the type that doesn’t trust anyone in financial services?

Come to think of it, do you trust anyone at all?

Do you always know better?

Are you the type of individual that likes to take your own advice?

If you make a bad decision to you ‘take it on the ‘chin’ and carry on? 

Or are you just a sucker?

As mentioned earlier there are plenty of unscrupulous individuals and companies willing to empty out your savings and investments.

There’s no point in pretending otherwise.

The government and regulators do what they can but their effectiveness is limited, as ultimately any decision relating to what you do with your money, is your decision.

There are qualified and authorised advisors and advisory firms that package and sell inappropriate and risky investments and always will be. There are fund managers that market funds that are high risk or have no hope of generating returns. 

But in the wealth advice area the risks are increasing.

 

Wealth Advice Dangers 

In the United Kingdom, those with relatively small amounts to invest (£30,000 to £200,000) have been the group most impacted by poor advice. 

During the 1990s and 2000s high street banks literally had a ‘feeding’ frenzy on customers who were put into an endless pot of ‘mis-labeled’ investments promising high returns; and delivering anything but.

Whilst the RDR removed many of the incentives that distorted the working practices of the banks in the ‘Wealth’ space this has led to greater consumer protection a gap. This has eagerly been filled with those only too willingly to relieve you of your hard earned savings.

These are the real dangers facing novice investors (which many now are especially with more flexibility with pension cash).

Wealth Advice – So Who Can You Trust for Financial Advice or Financial Planning?

A Robo-advisor service? A SiPP provider? Your mates up the pub? Your parents/brothers/sisters? The Telegraph? Google? Warren Buffet? Money Mail? MoneySavingsExpert? 

Why not try an advisor authorised and regulated by the Financial Conduct Authority first? 

Or even better start here

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