When times are good and confidence is high, most financial advisers should be able to help generate at least reasonable returns. However, in times such as those we have experienced over the last 18 months, having the support of a ‘trusted adviser’ you can rely upon to help, guide and advise you is more important than ever.
Don't go it alone
Now is not the time to try and go it alone – even if you think you have the right knowledge and experience. Regrettably, we have seen many people where self-select investing, which whilst on the face of it may save costs, has been an expensive experiment. A study, in November 2020, by the International Longevity Centre (ILC) shows the average benefit of financial advice to be £47,706 over a 10 year period. This clearly demonstrates the difference between the value that good financial advice can provide, even when taking into account the associated costs.
Beware of Scams
Unfortunately, during the period of Covid-19, we are hearing of more people falling victims to scams. These can take many different forms and could be about pensions or other high return investment opportunities and look like they are from reputable firms. Scammers can be sophisticated, opportunistic, appear authentic, using some of the current uncertainty surrounding the pandemic as an opportunity to persuade people to disclose personal or financial information either online or verbally. Whilst they may be likely to target the vulnerable, anyone can be affected or taken in. One of the best ways to avoid falling victim to a scam is to build a long-lasting and trusted relationship with a regulated and authorised financial adviser.
Engage with an adviser you can trust
First and foremost do you have an ongoing relationship with a financial adviser? Assuming you do does your financial adviser really know and understand you, your objectives, needs, wants, aims and circumstances and what you are trying to achieve both now and in the future?
Identify and review your attitude to risk
Attitudes to risk vary greatly, with some individuals looking to take a more cautious approach with their investments during these uncertain times, whereas others wish to take a more bullish approach, as they have greater levels of confidence in what lies ahead. Only when your financial adviser really understands you and your personal approach to risk are they in a position to advise you. What risk, if any, you are prepared to take to achieve your aims and objectives? Understanding how much risk you are prepared to take, or are currently taking on your existing investment or pension portfolio, is crucial. This is very personal to you and can change over time, depending on your objectives, your experiences and current circumstances.
Timing and diversification
When volatile times happen, as we have recently seen, it may seem daunting. A good financial adviser will help you understand the principles of investing and the techniques available for managing risk effectively, through diversification of assets. No financial adviser, however, can claim to be able to predict the peaks and troughs of financial markets, and it’s extraordinarily difficult to time exactly when the best days to invest will be. However, ‘time in' the markets, not ‘timing” the markets, is generally the most effective approach over the medium to long term.
The potential impact of this health crisis does not change some of the other fundamentals of good financial planning, such as whether you are protected against the unexpected happening, for both individuals and businesses, in terms of life insurance, critical illness cover or income protection. Unfortunately, this is a fact of life; however, it can be planned for with good advice. The pandemic has unfortunately brought home the importance of this to many more people than before.
At Armstrong Watson, we provide personalised financial advice. Our quest is to help our clients achieve prosperity, a secure future, and peace of mind. That means being with our clients during not just the good but also the more challenging times. We have designed Our Guide to Investing and Our Guide to Investment Solutions which explain how we help clients understand the principles of investing and the range of solutions that are available to invest in, these guides are available on our website. Where appropriate and required we also provide our clients with an ongoing advice service.