Financial advice can have significant benefits. In 2019 this was quantified in a report produced by The International Longevity Society at £47,706 as an overall increase in wealth when compared with similar individuals who did not receive advice.
* The context within which that figure is derived can be read in the full article and it makes for informative reading.
Whilst there is clear benefit in receiving financial advice, the cost of receiving that advice must also be considered against the objective it serves.
The impact of costs and charges on investments is something that is well documented and the important thing to consider is that in a savings or investment environment, the impact of those costs are compounded by the loss of any potential investment return on the value of those fees.
As with all significant financial decisions in life, finding the cheapest does not necessarily equate to securing the best outcome. The better objective is being smart about securing the best value; quality of service at a cost which represents value for money.
Sandringham Financial Partners – Darlington charge clients a flat ongoing fee regardless of the value of assets they hold. This fee is reflective of the time spent putting together and maintaining a client’s financial plans and detailed cash flow models and allows Sandringham Financial Partners to clearly demonstrate good value to their clients.
The impact of this flat fee can be particularly significant compared to the common approach of percentage-based charging against the value of your pot.
The chart above gives an example of a client with an initial investment of £197,500 and regular contributions of £3,000 per year made at the end of the year with a 5% return, over the course of 25 years.
The starting fee of 1% and the flat fee of £1,975 are equivalent at the start of year 1. The flat fee has been linked to inflation and is deducted annually in advance in this model.
* The International Longevity Society, supported by pension provider Royal London – What it’s worth: revisiting the value of financial advice
Over the course of the 25-year investment horizon the difference between the flat fee and percentage-based charge becomes significant.
With many people now living 20+ years into retirement it is important to consider the impact of fees on your long-term wealth, as the combination of cost and time has the potential to make a significant difference to the value of your pensions and investments.
If you are interested in discussing your requirements or think you might benefit from moving to advice with a fixed ongoing fee, please get in touch on 01325 808075 or email [email protected] to arrange a no cost initial chat.