6 lesser-known and positive reasons a financial planner is good for your wealth

A recent article in the Guardian tells the story of a reader who was told by a pension provider that her terminally ill husband’s retirement fund had been lost. Can you imagine the anguish that must have caused?

It reminded me of one of the main reasons people use financial planners: peace of mind. Having a planner who knows what pensions you have and who the providers are could be a huge weight off your mind at such a stressful time.

According to research by Royal London, people who work with a financial planner felt more prepared to deal with life’s shocks than those who didn’t. While peace of mind is a valuable benefit, it can be one that some people overlook.

So, if you’re wondering: “what are the benefits of working with a financial planner?”, read on to discover six that you may not have thought of.

1. A planner takes a holistic view of your wealth

Knowing every aspect of your wealth is at the heart of good financial planning. While you probably have an objective in mind, a planner considers how your goal dovetails into other areas of your finances.

For example, while certain types of investment might help boost your wealth, they could also increase your tax liability. A planner will be able to confirm whether this is a risk and could provide other options that may help you achieve your goals in a more tax-efficient way.

2. Planners could help you pass more wealth on to loved ones

In 2022/23, Inheritance Tax (IHT) is typically charged at 40% on the value of your estate above the nil-rate bands. This could significantly reduce the amount of money you pass on to loved ones. A financial planner may be able to reduce or even negate any tax liability your estate has, using gifting and careful planning.

Depending on your circumstances, the nil-rate bands might allow you to leave up to £1 million to your family before IHT is charged. Furthermore, as financial planners have a detailed understanding of your wider wealth, they can ensure that all your assets are accounted for and passed on to loved ones.

According to the Independent, £15 billion worth of inheritance has not been claimed because loved ones don’t know what assets and savings the deceased had.

3. A planner makes sure you’re taking the right amount of risk

While taking too much risk could be bad for your wealth, so could not taking enough. This is because growth typically comes from the higher-risk assets within your investments or pension pot, such as stocks and shares.

Not exposing your savings to enough risk may significantly reduce their long-term growth potential. A financial planner will assess how much risk is right for you and make sure your money is exposed to as much potential growth as possible while maintaining a level of risk you’re comfortable with.

4. Financial planners provide peace of mind

Working with a financial planner can help you feel more comfortable and less stressed about your finances. They are on hand to answer any questions you may have about your wealth or investments, and can help you understand whether your money’s on track to meet your financial goals. If it’s not, a financial planner could provide options that might help achieve them.

This dovetails into the above-mentioned research by Royal London, which showed that working with a financial planner could help improve emotional wellbeing. This is because those who do, tend to feel more in control of their finances and less anxious about money, something highlighted in the following illustration, which is taken from the study.

Source: Royal London

5. A financial planner could help you save the planet

While this is the least obvious benefit of all, working with a financial planner really could help you do your bit for the environment.

According to Pensions Age, placing your money into sustainable investments, which are today known as “Environmental, Sustainable and Ethical” (ESG) funds, could be 40 times more powerful in tackling climate change than switching to a renewable energy provider.

A financial planner can help find the right ESG for you, and explain the potential benefits and risks of investing in one.

6. Planners could help you protect your wealth in volatile times

According to Royal London’s research, working with a financial planner could give your wealth a significant boost. It pointed to a study that looked at those who worked with a financial planner between 2001 and 2006 and those who didn’t, and then compared the groups’ wealth 10-years later.

Those who had taken advice were on average £47,000 better off. What’s particularly interesting about the findings though, is that the period assessed includes 2008, a time when the world was gripped by a financial crisis.

This suggests that working with a financial planner when the global economy and stock markets are uncertain, as they are in 2022, could help you protect your wealth.

Get in touch

If you would like to discuss the benefits I could provide for you and your finances, ESG funds or investing more generally, please email a.douglass@grosvenorconsultancy.co.uk or telephone 01793 766 123.

Alternatively, call my mobile on 07525 177 046. Please note that while I offer high standards of service and ensure any plan is right for you, I’m also a busy mum, so work Mondays and Tuesdays only.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

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