How Good Financial Advice Can Enhance Returns

Somewhat fearful of the rise of machines and the possibility of losing my job to some faceless adviser, I asked ChatGPT to list some benefits of using a financial adviser. The following is what it came up with:

– Creating Personalized Investment Strategies: Advisers tailor advice to individual financial goals and risk appetites.

– Regulatory Oversight: Advisers are regulated by the FCA, ensuring adherence to professional and ethical standards, instilling confidence in investors.

– Emotional Discipline Support: Advisers help clients stay focused on long-term goals, avoiding impulsive decisions based on short-term market movements.

– Rational Perspective: Advisers offer a balanced view during market volatility, reducing the likelihood of decisions driven by fear or greed.

– Tax-Efficient Investing Guidance: Advisers can enhance net returns by utilizing tax reliefs and allowances, such as ISAs and pensions.

– Compliance with HMRC Regulations: Advisers stay updated on tax laws and investment regulations, helping investors adapt strategies proactively.

– Avoiding Tax Pitfalls: Advisers can ensure investors make informed decisions that are aimed at minimizing liabilities such as those arising from Capital Gains

I took over at this point. The one thing that ChatGPT didn’t mention was performance. It is my opinion, subsequently backed up by independent study, that advisers can enhance performance.

The Result

The culmination of these benefits is that, according to independent analysis by Numis Securities, the value of advice amounts to an additional 2% growth per year. And, this is before taking account of monetary tax benefits as part of advice.

This 2% difference may not seem like much until we consider it’s application in practice. Let’s take, for instance, a £10,000 investment:

• With an annual growth rate of 5% over 20 years’ time would give us £26,532
• With an annual growth rate of 7% over 20 years’ time would give us £38,696

So, in summary, taking financial advice can greatly improve returns over a long period of time. This 2% additional annual growth could have huge positive implications for your individual goals such as an early or more comfortable retirement. If you would like to read more on the value of advice, you can click here.

Additionally, if you have any financial advice needs or would like to in the benefits of using an adviser, please contact me via the details below.

Find out more about our Financial services here.