Financial advice, provided by a qualified and regulated provider, get be invaluable for a new investor. Without this advice, they may have never taken the dive into the stock market at all. But financial advice isn’t cheap… or is it? This guide on how to get cheap financial advice will try to explain all the different routes to getting advice on your investments for the lowest cost.
How to get cheap financial advice
Why is it important to keep financial advice cheap?
Financial advice is a tool which will transform the pension and retirement savings of an individual.
With a return of 2% per year (such as that on a cash savings account), a lump sum of £100,000 would grow to £148,500 over 20 years.
The same amount invested in the stock market, returning 6% per year would leave you with £320,700 instead.
That’s the ridiculously large difference that the stock market makes. For many people, without a financial adviser, they would not make the step because they wouldn’t feel confident enough that they were investing in a sensible way to minimise the risk they take.
However, if financial advice is only expensive (and is thus the preserve of the rich), this effectively locks out many working and middle class families from the benefits of capital growing over their lifetimes in this way. A dramatically different class of retirement would be kept out of reach.
How to get financial advice for free
First, let’s consider the cheapest of all advice – free advice. How can you get free advice?
First we should understand what ‘advice’ means because this definition will be very important when looking at different sources of advice later.
In this article I’d like to split the world of financial advice into two elements:
- Regulated independent financial advice
- Informal financial guidance
Regulated independent financial advice is provided by an independent financial adviser, or IFA for short. These are also known as financial planners.
This type of financial advice is special because:
- It will be provided tailored to your individual circumstances
- It will comply with industry standards
- You will have recourse if the advice is negligently provided
All other financial guidance is informal, and is not provided under the same conditions. This includes:
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- Online journalism (such as this article and indeed this website – see our disclaimer).
- Money advice columns in newspapers
- The education sections of stockbroker and government websites
So let’s return to the question of how to get cheap financial advice, and more specifically, can you get financial advice for free?
The answer is no – you cannot get regulated independent financial advice for free. The costs of providing professional advice are high, and no business model can sustain itself if the advisers hand out the advice for free.
However, if you have no budget for financial advice, you can get high-quality informal financial guidance for free, and I’ll show you how.
Free Tip #1
Sign up for Amazon Kindle Unlimited – they have a free trial which allows you to read unlimited books on any device for free for the trial period. In this time, you can learn from some of the best investors on the planet.
Free Tip #2
Look for online investment courses such as Coursera which also gives a free trial period where you can access their professional courses (delivered digitally by respected financial institutions), and can continue for only a low monthly fee thereafter.
These are my two favourite tips because they both allow you to access an abundance of information over a short period. If you take some time off work or are between jobs, you can seriously upgrade your financial knowledge in a very short period of time using these resources.
However, as I made clear above, this is not financial advice, therefore you will still be making financial decisions on your own, but you’ll have more knowledge and better tools to do so.
Avoid Citizens Advice
It would be a mistake to assume that the Citizen’s Advice will be able to provide you with free or cheap regulated financial advice. The bureau does not provide this service to investors. Instead, their charity is primarily set up to assist those in desperate need of legal assistance (including people who have been hoodwinked by investment scams, or want to pursue a claim against a financial firm, for example).
Citizens Advice will be able to provide some simple guides to investing, but these will replicate much of the information freely available on government websites such as the Money Advice Service.