We all like to believe that we’re responsible adults. We listen to advise from our parents as we’re growing up, but we eventually learn to make our own decisions. We might take advice from our friends or our peers, but ultimately we make our own judgments and follow our own paths. That philosophy extends to every area of our lives, from relationships to career decisions. It also – and perhaps more importantly of all – extends to our finances.
As a culture, we’re even more private about our money than we are about our personal relationships. Americans in particular don’t like to talk about money, and that stems from a feeling of awkwardness and embarrassment. If we believe we earn less than our friends, we don’t want to own up to it. Sometimes, when we think we earn more than our friends, we don’t mention it because we don’t want them to feel embarrassed. If we struggle to discuss money with the people we know and love, we’re even less likely to discuss it with a total stranger. Because of that, many of us don’t speak to financial advisers when we should.
Not taking financial advice on board at crucial moments in our lives can be costly. Although the thought of sharing intimate details of your income and expenditure with a stranger can be embarrassing, and you might loathe the idea of paying someone a fee to tell you what to do with your own money, the costs of not doing so can sometimes be higher than the cost of those fees. Here are some examples of those pivotal times.
When Buying A House
It’s entirely possible to buy a house without speaking to a financial adviser. So long as you have a clean credit history and a good salary, buying a house should be as easy as saving up a deposit, approaching your bank, and persuading them to offer you a mortgage. Your bank will offer you a loan on the best terms they can, you get the house, and everybody’s happy. You’re may only remain happy for so long as you live in ignorance.
The terms offered by your bank are likely to be dramatically different from the terms offered by another bank. Some banks specialize in lending to self-employed people. Others offer significantly higher multiples of your income as a loan. Some lenders don’t even have a high street presence and don’t deal directly with the public. The only way to gain access to those lenders is to speak to a broker – and that can save you huge amounts of money over the full term of your mortgage even if you do have to pay a fee for their advice.
When Taking Out Insurance
Not enough people have insurance. There are millions of people in the world – many of whom have people who financially depend upon them – who aren’t covered for a single dollar in the event of their death or serious illness. If you have any form of insurance at all, you’re doing better than most people are – but that doesn’t mean the insurance you have is right for you.
As is the case with mortgages, some insurers only work via advisers and brokers. An adviser can help to ensure that your insurance covers you for the right amount of money, and the correct number of years. They’ll help you to write your trust, so you can be assured that your money goes to the right person or people when a claim is made. Perhaps even more importantly, they’ll know how the underwriters of one insurer differ from the underwriters of another. Your high blood pressure might double your price with one insurer but make no difference at all with another. That’s knowledge you need to have – and speaking to an adviser is how to get it.
When Making Investments
There’s no guaranteed way to make money from investments. Markets go up, and markets go down. Professionals don’t like to admit it, but there isn’t a huge difference between investing in the stock market and playing online slots. Some would even say that online slots are more honest about the risks involved. At least you know you’re gambling when you decide to spend money on a slots website. A smooth salesman might convince you that you’re onto a sure thing with an investment, when in reality, that might be a long way from the truth.
While investments might be hard to predict and even harder to understand, someone who has years of experience and professional qualifications in the field will know a lot more about it than you do. Not only will they have access to funds that you wouldn’t have access to if you tried to invest money without them, but they’ll also be able to tell you about the history and potential future of that fund. Speaking more cynically, they can also be held liable if things go wrong under certain circumstances. You have nobody to complain to or make a claim against if you suffer financial losses from following your own bad advice. You might do if you went through an adviser.
When Taking Out A Pension
To a lot of us, talking about pensions is a lot like talking about death. Retirement is a long way in the future for many of us, and we don’t like to think about getting old when we have our whole lives ahead of us. That means we have a tendency to put off getting pension advice until retirement appears on the horizon – and by that time, it’s often too late. Saving up enough money to comfortably live on in retirement just isn’t an option when retirement is only ten years away, and state-backed guaranteed funds will only carry you so far.
A qualified pensions adviser will be able to assess you as an individual, help you to determine how much money you’ll need in retirement, and connect you with the pension provider who offers you the best return for your monthly payments. There are hundreds – perhaps even thousands – of different pension funds, and you have almost no chance of finding the best option for yourself by going alone. If you want to be able to truly enjoy your retirement without worrying about running out of money, you need to speak to a pension adviser.
There’s nothing that can be done to take the awkwardness out of the conversation if you don’t feel comfortable talking about money, but most of these conversations only need to happen once. Get your pension right the first time, and you can leave it running for your whole life. The same can often be said about insurance. Financial experts are there for a reason, and the knowledge they’ve acquired is valuable – don’t allow yourself to be put off the idea of taking advantage of it.