Despite the advantages, relatively few people speak to a financial adviser or financial planner before making important decisions with their money. A survey carried out by the Financial Conduct Authority (FCA) as part of their 2017 Financial Lives report found that only 6% of UK adults had worked with a regulated adviser in the past year.
Instead of taking professional advice, choosing to go it alone means you carry the responsibility of your decisions and their subsequent outcome.
New research from financial services provider Sanlam found a high degree of confidence among DIY investors. They found that almost half of adults in the UK are choosing not to work with a financial adviser to plan their finances. The ‘What’s Your Number?’ report from Sanlam found 44% of those that haven’t spoken to a regulated adviser believe they can manage their finances themselves.
The lack of people seeking advice, and their confidence in making the best decisions without the help of an adviser, comes at a time when more than half of savers have doubts about their ability to retire on their timetable. 55% of savers fear they won’t be able to retire on time, and 77% admitted they haven’t set a target for their retirement savings. A timetable for retirement and knowing your number (how much you need to save to live the life in retirement you want), are two important duties fulfilled by financial planners such as our business, Wells Gibson.
The research found it was members of the older generations who were least likely to have spoken with a financial planner. 51% of over 65s have never taken financial advice, and 57% of people in this age group said it was because they could do it on their own. One in five of those responding to the survey who had more than £100,000 in savings said they had never spoken to a professional financial adviser at any time in their lives.
The majority of those said they trusted their instincts to make the right decisions. Unsurprisingly, the Internet seems to be a popular source of information in helping DIY investors make their financial decisions. It came in second place after speaking to family members.
However, the research did show that those who seek advice are far more confident about their decisions. Advised clients were twice as confident as non-advised clients about being able to retire how and when they wish. Advised clients were also far more likely to have set an income target for retirement, and to have allocated or passed on money to the next generation while they are still alive.
Lawrence Cook from Sanlam said:
“In this age of accessible information, the temptation is to think that all the answers to problems we face can be found online. When it comes to retirement, the real task lies in identifying the right questions to ask.
“Holistic financial planning is about so much more than tactical advice, and most will naturally be unaware of the financial planning strategies that can help them reach their financial goals.
“At the heart of the problem, many are simply crossing their fingers – in some cases burying their heads in the sand altogether. The truth is the majority – 55% – have doubts they will be able to achieve the retirement they want.
“The fact remains that proper, robust financial planning is the best way to ensure you can achieve your financial goals in a smooth and timely way.”
DIY retirement planning is a bad idea. Working instead with a professional financial planner, means getting answers to your big questions and carefully considering all of the options, and mapping out a retirement plan on your terms. The question is, what does your financial future look like?