The importance of cost

28th July 2011

As we all know “you get nothing for nothing” and the same is true of financial services and advice, there is a problem though and it has been made to appear by the financial services industry that you do get financial advice for nothing. This is one of the greatest scandals of our age and we are now reaping the rewards of the distrust this has engendered with excessive borrowing, inadequate insurance, plus low savings and pension provision.

There are however chinks of light appearing with the Financial Services Authority proposing radical action in 2012 with the banning of commission for “Investment advice” along with a plan to ensure that the minimum qualifications for advisers are increased to a reasonable level. There is also the continued focus of such organisations as Which? on the activities of the industry and the ways in which commission creates conflicts of interest.

It is important to understand that any cost you pay (fees, charges, interest, penalties) comes from you, whatever the salesman says. Your money is hard earned and must work for you in the best way it can. Cheapest is not always the best but if it is not the cheapest then you must firstly understand what any cheaper option will do and what added value you will get if you choose a more expensive option.

This is not news – you need to decide for yourself if what you will get for your money is worth it, the problem with financial services is that firstly the costs are often hidden, secondly that the benefits are unclear and most importantly that the benefits often pan out over the long term so to judge the benefits today is hard.

The key is to find an Adviser that signs up to a Professional Code of Conduct and promises to “always act in the client’s best interest” look for a Certified or Chartered Financial Planner.

To find out more about how we can help you to achieve your financial goals, get in touch.