Unusual superheroes, the fallacy of free and why you should pay your financial planner fee with pride.
“I don’t pay my financial adviser” he exclaimed proudly “So you’re not particularly competitive if you charge an upfront fee and then on an ongoing basis…are you?”
Normally I’m quite an easy going, friendly, cheerful guy the majority of the time…not aggressive (like the incredible hulk) more dogged (like the incredible questioning man – if that isn’t a superhero it should be!)
….however, I felt that on this particular (remove) occasion I could tell this particular conversation might go downhill and quick.
“Interesting,” I said “How does your financial adviser earn a living then?”
“Dunno,” he said “Not my problem…as long as I’m not paying directly I’m not worried…”
“What do you mean not directly?” I questioned
“Well, my adviser said that a proportion of the charges I pay for the product go towards paying him…”
“Okay…” I say “How much?”
“Not sure,” the man says.
“How much, in cash terms?” I say “and how much goes to your adviser once or every year?”
“Not sure” the man says “All I know is that it doesn’t come out of my own bank account! Surely that’s better for me right?”
“It depends” I say “However you should be crystal clear on what you’re paying.”
“As I said…it comes out of the product”
“I know” I said “But when an adviser payment is made from a ‘product’ there’s only one pocket they’re ACTUALLY coming from…”
“The pension company?” he questioned.
“Nope” I said
His head tipped slightly…He knew the truth.
“Me” He said.
The reality is that if you’re engaging a professional financial adviser you should expect to pay for it.
It’s also important to understand what a proper professional adviser should do…
They should be focused on helping support you to achieve your goals…not selling a ‘product’ to ensure he is paid.
They should be focused on the best way to help you…not on the best way to help himself.
They should be focused on explaining the best way to live the life you want….and the plan should reflect that.
There’s plenty of things you should do to make sure you get the highest quality financial advice (I’ve spoken about them here and here)…
However, one thing you should certainly do is expect to pay a decent (change to fair????) fee for the advice…If you’re trusting someone to help you plan the decisions you make which might map out the next 30 years of your life it’s worth getting someone who is both brilliant and only has your interests at heart….
….I’d suggest that whilst all of the best advisers I know deliver exceptional value don’t expect that to be ‘cheap’ or ‘free’…
In fact I’d go as far as ensuring that if your adviser is totally clear about the fact that you pay them and you know what you pay you should be a little bit proud about the fact that you’ve got this level of transparency (although ‘pride’ might be taking it a step too far!)
I’d also suggest that if you don’t know what you pay for advice…find out today.
That ‘advice you don’t pay for’ might be a lot more expensive than you think…
For more information about how we might be able to help feel free to get in touch on 01708 606 202 or firstname.lastname@example.org