When it comes to seeking guidance in critical aspects of our lives, we instinctively turn to professionals we trust: doctors for our health, solicitors for legal matters, dentists for our teeth and mechanics for our cars. These experts play integral roles in safeguarding our well-being, providing expert advice, and helping us navigate less familiar terrain. But there's a profession that often flies under the radar when it comes to recognition and trust: financial advisers. The value of financial advice can not be underestimated.
The value of financial advice: Why do we need it?
When we think of professional financial advice, various topics may come to mind, such as our tax bill, guidance on a particular investment, pensions, and mortgage advice. However, the scope of financial advice goes far beyond these individual aspects. It's not just about 'the most tax efficient way' to do this or that. It's far more than that.
Regardless of personal circumstances, money touches all facets of our lives. Unfortunately, our brains are not naturally wired for effective financial decision-making, often falling prey to behavioural biases that can seriously harm our wealth.
Additionally, unforeseen circumstances like bereavement or divorce can further complicate our financial journeys and lead us to make poor decisions. Considering these challenges, it is crucial to be fully informed and guided by an expert.
The role of a financial adviser extends well beyond just being technically competent on mortgages or tax optimisation. The relationship between an adviser and a client can span not only years but also significant life events and milestones.
As a financial adviser, you become the crucial support system and knowledge-base for clients, their loved ones and future generations, guiding them in making informed and sensible decisions that secure their financial futures.
Louise's Story: A testament to the power of advice
Carla Brown, financial adviser at Oakmere Wealth Management Ltd, Partner Practice of St. James's Place, shares a remarkable story that illustrates the depth of her relationships.
One of Carla's clients, Louise, along with her husband Andy, had a well-designed financial plan in place. Tragically, Andy fell critically ill and passed away from cancer, leaving Louise devastated and facing numerous challenges.
In conversation together, Carla reflected on their journey: "The first part of the relationship was about establishing your situation at that time – what you already had and how you were going to ensure the family was fully protected from that moment onwards."
During Andy’s illness, Carla's unwavering support provided immense reassurance to Louise and her family: “Because of Andy’s treatment, we were to-ing and fro-ing from hospital daily. It was reassuring to know that Carla had everything under control, and we didn’t have to worry about it” Louise explains.
Beyond managing the financial aspects, Carla also assisted with wills and powers of attorney, understanding that these seemingly peripheral matters greatly influence both decision-making and financial wellbeing.
Grateful for Carla’s guidance, Louise attests that her family is now financially secure, and even her children are becoming more financially conscious as a result. Carla emphasises her commitment to making a positive impact through her work, stating, “To be able to do some good with the Practice, to give something back, we try to put that across in what we do and what we put out to clients. It’s important that people understand that.”
The importance of professional training and soft skills
Carla’s story shows that what really matters isn’t merely possessing a robust knowledge of financial processes or financial products, but rather having good people skills, being able to understand how others feel, and being strong when facing challenges.
Contrary to popular belief, it is not skills in mathematics or deep knowledge of economics that makes the difference between a good financial adviser and a great one. Instead, it is the ability to make well-informed yet sensitive decisions that truly sets exceptional advisers apart. These professionals become trusted partners, standing by their clients during times of joy and celebration, as well as during moments of uncertainty and crisis. It's not just about understanding a client’s financial situation, investments or the tax implications of decisions; it's about providing ongoing support for clients through thick and thin.
Recognising the need for comprehensive training beyond just helping individuals pass exams, the St. James's Place Financial Adviser Academy has designed a comprehensive programme that equips individuals with the knowledge, qualifications, and expertise required to provide robust financial advice to those who seek advice. However, the Academy's training goes beyond mere technical knowledge, developing qualities such as empathy, communication, and resilience.
Louise's story is not an isolated incident. There is a significant and growing demand for financial advisers worldwide. In fact, we estimate that the profession needs approximately 50,000 new advisers to meet the growing demand in the UK. Each adviser has the potential to positively impact the lives of hundreds of clients.
The need for human advice
There has never been a better time to be a financial adviser in the UK. Today, the total UK retail wealth market is over £2.6 trillion, and is expected to grow to £3 trillion by 2026. The mass affluent market in the UK is often defined as individuals with between £50,000 and £5 million in investable assets. There were estimated to be 13.1 million such individuals at the end of 2022, and this number is expected to grow to 14.3 million by the end of 2026.
Furthermore, because of increased intergenerational wealth (it is estimated that over £5.5 trillion will pass between the generations within the next 30 years) and a rising life expectancy (resulting in a longer retirement period and more complex financial affairs), the need for experienced and agile financial advisers is stronger than ever.
For those approaching retirement, taking financial advice is critical. It facilitates financial goals being meant and savings accounts being protected. Our ageing population needs professional advice to make the best decisions for their financial futures.
Over the last 30 years, the UK adviser population has fallen from over 250,000 to under 30,000, due to the professionalisation of the profession (the Retail Distribution Review) and an ageing adviser population. Indeed, the average age of a financial adviser in the UK is 57.
If you estimate that each of the 27,000 advisers left have on average 150 clients, with a market size of more than 13m people and growing, it is estimated that the profession needs an additional 50,000 advisers to meet the demand in the UK.
It’s important to recognise that financial advisers are committed to their clients’ best interests, providing clarity’ education, and empowering people to make informed decisions. By embracing their expertise, clients gain confidence in their financial journeys, ensuring a more financially secure future.