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It's the new year (and, if you're not being pedantic, a new decade!) - and you've decided it is time to add some structure to your financial life. This article is intended to help you navigate some of the resources available to help you do so. 

This article is not intended to be financial advice specific to your particular circumstances.

Before we begin...
Guidance/Advice vs. 'Investment Management'

Let’s get one thing straight first: this article is primarily about financial advice or ‘guidance’. Investment management is often a part of that, but it is just one part. 
 
An example: Sally and Jonny have saved £100,000. They want to know what they should do with it. It’s likely they should keep at least some of it in a bank account that they can access easily in case of emergencies. The rest of it might get invested in the ‘market’.  The advice/guidance part is deciding how much goes into the ‘emergency fund’ and how much into ‘the market’. The investment management part is about choosing the investments within ‘the market’.
 
To use a fairly well known example, robo-advisors typically have offered an investment management service only (although I notice that some, like Nutmeg, are now offering a ‘guidance’ or ‘advice’ service at an additional cost).

'Guidance' vs. 'Advice'

Financial ‘guidance’ and ‘advice’ are terms that hold legal sway in the UK.
 
Guidance is:
            -Usually, but not always, free
            -Provides information that should help you identify your options and narrow down those options
            -It does not involve a recommendation that is specific to you
 
Advice is:
            -A service that provides a recommendation to you, e.g. you should open a stocks and shares ISA
​            -The provider of the recommendation must be authorised by the FCA
            -You will almost certainly pay a fee for this service

Is 'guidance' helpful? YES!

Receiving guidance is simply a way of better educating yourself about what is out there.
 
Examples of guidance providers are websites such as moneysavingexpert.com, the millennial-focused app Finimize* and the millennial/female-focused community Vestpod. Virtually any information available publicly is going to be guidance not advice. ‘Financial coaches’ are usually providers of ‘guidance’ that charge a fee for doing so.
 
People who don’t want to pay for advice might find that, with a little effort, they can get what they need from ‘guidance’. Even if you end up opting to pay for advice, educating yourself before interviewing potential financial advisers is a good idea. 

*Full disclosure: I was involved in the early days of Finimize and remain a shareholder.

​ Why you might opt for 'advice'

​My own view is that everyone would, ideally, like personalised advice. For one, it’s less work than learning on your own. It’s also probably helpful to ask someone what they think about your own particular situation. For example, if I want to save for X, should I open an ISA and, if so, what type of ISA and in which funds should I invest? Of course it's easier to get this information directly from an adviser than from Google.
 
However, there is obviously a cost. The individual talking to you has to get paid for their time and also they or their firm has to pay substantial costs to be regulated and, crucially, insured. There is no free lunch.
 
And so, you are left with the choice of consuming ‘guidance’ and making your own decision or paying someone to help you.
 
For many, many people – especially those with relatively straightforward aims like saving a bit more money each month and investing a modest amount for the long-term – relying on guidance is often the best approach. If you simply Google ‘basic financial plan’ and find you are stopping on point 1 or 2 (e.g. create a ‘safety net’, pay off ‘bad debt’), then you probably don’t need to pay a human being to tell you that.
 
But if your circumstances are more complicated – if, for example, you have no ‘bad debt’ and your household is able to save thousands of pounds per month or you are fortunate enough to have a pot of accumulated savings – then seeking out professional advice – and paying for it – could be very beneficial. 

What you should expect to pay for 'advice' 

​The cost of advice is a bit of a minefield and it can be difficult to compare across providers.
 
For those with at least £250,000 to invest, I think the benchmark is about 2% per year all-in (i.e. including everything from advice, investment management, 'platform' fee and VAT) – although many well-known firms charge more than that. In most cases, there will be an upfront fee for financial planning in addition to this.
 
It is possible to opt for a fixed-fee approach where you pay something like £1,500 for a financial plan and then an ongoing amount of £50 per month. In fact, just this week a firm launched a £500 per year service. However, this is likely to be for advice only and not for any investment management – and is probably limited to telephone or online advice only.
 
At TindleWealth, we charge a fixed fee of £200 per month for financial advice (for a minimum of 12 months). There are additional fees for investment management (our fees are explained in detail here). We’re not the cheapest but I think we compare favourably with our competitors for the service we provide: personalised financial advice that is delivered with a high level of service. Our fees certainly compare well to the household names that similarly offer integrated financial advice and investment management. 

In conclusion... 

I have purposefully left out the name of some specific providers above because it’s not worth me being contacted by their communication teams. I am happy to speak with anyone and to share my thoughts on the market for guidance/advice and some of the providers that exist in both spheres.
 
Of course, please get in touch if you feel you would get good value from our service and are interested in learning more. I am always happy to have a complimentary initial chat. You can learn more about our Professionals Program - a financial advice program aimed at higher earning professionals - here. 

​Scott Tindle, CFA
+44 (0)203 858 0637
scott@tindlewealth.com

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Previous posts include
Saving for Private Education - Tax Efficiently
The Woodford Saga - Explained
What a rising pound would mean for your investments

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