The decision to let someone oversee your personal finances can be a very daunting one. It requires a significant degree of trust and an acceptance that they are acting in your best interests.
But what if that’s not the case? What if your financial adviser has their own agenda or isn’t putting your needs first?
A client/planner relationship should be built on communication, trust, and honesty.
You’re looking for a wingman to follow you into the dogfight that is the financial world. You need someone who will make sure you fly home safely with medals pinned to your chest — you’re looking for the Goose to your Maverick!
Top Gun feels an apt analogy. The sequel released this year harked back to the 1980s, a time with more in common with the present than just pop culture. The 80s were a period of high inflation in the UK and a cost of living crisis, a mirror image of the situation the UK finds itself in today.
The right strategy could help you navigate the current turmoil and emerge stable, secure, and on track to meet your long-term goals.
So, before you jump into your personal cockpit and prepare to take flight on your financial journey, you better make sure the right wingman has your back.
Read on to discover three things your financial adviser should be doing for you, because if they aren’t then perhaps it’s time to reconsider your choice.
1. Your financial planner should put you first and solutions second
Listening is a lost art. It can be rare in all walks of life including business.
If Goose never listened to Maverick, they might have never been picked for the Top Gun academy.
You want to have someone by your side who knows you, your life, your family, your dreams, your passion, and your end goals. They should be so in sync with you that you find yourself duetting to Great Balls of Fire.
This is what financial planners should be doing — and it’s what we promise.
Only once we know you, have built up trust, and have a keen understanding of your personal objectives do we consider talking about your money.
A study by Royal London reports that financial advice has been shown to improve emotional wellbeing by helping relieve stress and anxiety. Among participants, 68% felt more in control of their finances after receiving advice, and 63% felt financially stable and secure.
We want to give you peace of mind and take some pressure off your shoulders.
Once we understand your goals, we can plan with you. An integral part of this process is using cashflow modelling to enable us to forecast your future finances.
Your personal life map gives us the information we need to build a bespoke plan that will help you make more informed decisions that are tailored to achieve your goals as soon as possible.
Honesty and transparency are a key part of our proposition. A good financial planner doesn’t try and sell you on products or providers, that they may be getting paid to promote. They pursue the best options for you.
Your financial planner isn’t a very good wingman if they don’t deliver on all these fronts for you.
2. Your financial planner should recommend smart investments based on evidence
If you’re getting into a fighter jet with someone, you better hope they know how to fly.
Knowledge is power — it’s why our investment philosophy is entirely evidence-based.
If your financial planner purely relies on gut feelings and instinct, you better hope you’re the luckiest client on the planet, because few active fund managers beat the market in the long run.
It is why we use “passive”, or evidence-based, investing — an approach that’s grounded in facts derived from the most renowned sources and through extensive research.
Evidence-based investing involves buying and holding a highly diversified portfolio of low-cost funds, a strategy that gives you a good chance of never underperforming the market.
Investing in the markets on a long-term basis typically sees positive returns. IG reports that for any 10-year period between 1984 and 2019, the FTSE 100 (the UK’s leading stock index) saw annualised returns of 8.43%.
Active investing isn’t just ineffective in the long term, it can also be time-consuming and expensive.
Choosing to invest with a plan that aims to keep costs low leaves more of your money continually invested. This gives you higher compounded returns throughout your investment timeline.
In doing so, we ensure that the focus is always on delivering your ambitions and aspirations, not just on products we pick.
Remember: you first, solutions second.
3. Your financial planner should charge you in a fair and honest manner
There are two common ways that financial advisers typically charge you for their services — fixed and percentage-based fees.
The majority opt for a system that charges you a percentage of the value of your investments. Others (including us) charge a fixed fee, based on the time it takes to deliver a service to you.
Percentage-based fees aren’t necessarily fair, as they tend to be more expensive for clients, and could potentially cause conflicts of interest.
Imagine if Goose wasn’t purely focused on flying himself and Maverick to the top of the Top Gun rankings, but instead had a side hustle going on with Ice Man at the same time.
If your financial planner charges percentages, their focus isn’t necessarily going to be completely on the quality of service they give you.
Their fees depend on the size of your investments, so they will be incentivised to push you to invest more or sell you products that increase the amount of money you have invested through them.
That secret relationship with Ice Man we mentioned? That’s your percentage-based financial planner’s ulterior motives.
So, instead, we charge a fixed fee, adjusted for inflation. It means no matter how much you’re investing you get the same amount of work and service from us.
It also means that in 10 years’ time, even if your portfolio has seen significant growth, your fees won’t have changed in real terms. It puts more money where it needs to go, achieving your long-term goals.
Because in the end that’s what financial planning is all about.
And yes, (spoiler alert!) we know Goose dies in the movie, so it’s an imperfect analogy. But let’s just say if you work with us and trust us, then we’ll keep flying with you until the end.
Get in touch
If your financial adviser isn’t putting you first and their solutions second, they might not be the right wingman for you.
For further insights into our unique approach to financial planning, please email info@grey-parrot.co.uk or call us at 02039 871782.
Please note
This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
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