An unusual benefit of being a financial adviser is being asked what I do for a living. I respond by telling them I am a financial adviser; it always sparks additional conversation. Sometimes people say, “where would you invest x amount of money?” or “I wish I were at the level to need a financial adviser!”

It’s an opportunity to speak about people's financial goals. Sometimes, it is the first time they have considered them. Everyone should take financial advice at some point in their lives; arguably, it is more important than ever. The system of final salary pensions is long gone and now, people have multiple careers over their lifetime. Getting financial advice has become essential to achieve a financially secure retirement. 

Here are a few things I have learnt in the past year advising people:

Discipline of saving & compound interest

For some people the hardest part of building wealth is creating the discipline of saving. Salaries are being squeezed with the high cost of living, interest rates are low and the fear of missing out pushes people to spend more than they’d like when they see friends out having fun. Many people haven’t developed the discipline to put aside a portion of their salary each month and so don’t have large savings.

Some clients have spoken with me about this lack of discipline. Speaking to an adviser gets them started. Clients who have learnt the discipline to save have seen growth through the compound interest on their investments over the course of 20 years - showing us all that financial planning works!

Putting your money into good companies has a massive effect on the returns you receive over a long period of time. We live in a world looking for quick wins. People look for a return after only 1 year to 5 years. Good investing is about being patient and waiting for results over 20+ years. Developing this understanding from a young age, with time on your side, will help you in the long term.

KISS principle

I speak to individuals who have a complicated financial and tax situation. Maybe they are international, with investments, property and business abroad, and so they look to be as tax efficient as possible. We can get drawn into making our financial situation complicated: for example, by using a company to make offshore investments more tax efficient. 

However, why have a complicated financial setup? I remind people of an amusing phrase that is common in financial planning: ‘keep it simple stupid!’ or KISS. Why spend your spare time engrossed in tax returns to submit to HMRC, or managing a property portfolio, where you have to deal with every tenant issue that crops up? Life is better when you simplify your money. You can make your finances much simpler using approved tax wrappers, which are accounts designed to reduce or defer taxes on your investments. A pension or an ISA are brilliant investment tools to build wealth. Don’t overlook them! Build solid foundations by investing your wealth into great companies. 

Educating clients and market uncertainty

A common reason why some people don’t invest is because they don’t know where to put their money. They may have heard negative stories from family and friends, or perhaps in media publications, that puts them off. Educating clients on the market and helping them accept market uncertainty is key to growing investments. Historically, the asset class you get the best returns in is equities, which represents shares of ownership in a company.

They are also one of the most volatile investments. Why? because they also have the highest potential growth. By regularly buying shares in companies each month, over a period of time, you will have an average lower purchase cost. This is called pound-cost-averaging. 

I will always make sure the investment portfolio reflects the clients’ goals and their ability to stay invested. There is no point encouraging a client to have a high-risk portfolio, if they sell all their shares when the market drops. You are better off building a diversified portfolio which may have less movement in financial markets; however, it is better to reduce risk if that keeps your money in the market for longer 

How many people need financial advice

For a whole host of reasons, and across different times of life, many people would benefit from financial advice.  If you’re time-poor, or if you find finances deeply boring, it can be tempting avoiding healthy financial management. But that could come back to bite. 

I encourage people to seek financial advice, for their own benefit. I am here to give advice.

Taking the first step is often the hardest part, contact us today for a no obligation meeting. Get in touch via jonathan.pollock@sjpp.co.uk or +44 7527275684. 

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Past performance is not indicative of future performance.

The favourable tax treatment given to the ISA may not be maintained in the future, as this is subject to changes in legislation.

Please note that St. James's Place does not offer easy-access savings accounts or cash ISAs.

An investment in equities and shares will not provide the security of capital associated with a deposit account with a bank or building society.

Twelve Wealth Management Limited is an Appointed Representative of and represents only St. James's Place plc (which is authorised and regulated by the Financial Conduct Authority).

Although the content of the article was correct at the time of writing, the accuracy of the information should not be relied upon, as it may have been subject to subsequent tax, legislative or event changes.