Financial advice isn’t cheap. Knowing how to save money on financial advice can really make a difference to your financial returns, because every penny saved on financial advice is an extra penny you can invest to deliver your investment return!
So, how can you get advice whilst saving money? Do you have to compromise on the quality of advice to achieve a saving? These are all good questions which I’ll explore in the article below.
How to save money on financial advice
Saving money when looking for financial advice is much like saving money on any purchase. Follow the following three phases to ensure that you’re saving as much as possible:
Step 1: Save money by limiting the scope of advice
This first question concerns the type of advice you actually need. If you only need a small pizza, buy a small pizza, don’t splurge on a large pizza which will go to waste. The same principle applies to financial advice.
When you originally set up a consultation with a financial adviser, you may be nudged into the path of buying a full assessment of your financial situation (Income, protection, savings & investments, retirement and estate planning). But this might be completely superfluous to your current needs.
If you merely want advice on how to invest a lump sum of money into the stock market, then you can request for the advice to be limited in this regard.
A financial adviser, for many reasons (noble and less noble) will want to provide the most comprehensive advice possible, and I don’t criticise them for that. After all – it helps to understand all the background fully to be able to provide even the first piece of advice.
Would a Doctor prescribe a complex drug on the back of a single question to a patient?
No – they’d want to understand the patient’s full background to be sure that there won’t be any adverse interactions or reactions to the drug. A financial adviser in the same way would prefer to address all of your financial situation, as this would naturally be the safest advice to give.
That being said, by discussing your needs and your desire to keep costs low, you will be able to reduce the scope of advice if your needs are specific, and in doing so you could save hundreds or even thousands.
Step 2: Save money by looking for economical delivery
A financial advice firm will always look to recoup their costs and then make a profit on advice they provide. If their offices are plush, and their location is in the prime centre of London’s hot real estate market, those costs will be high.
And that means that the price will necessarily be high. It’s a simple equation. You’ll get what you pay for. The question is – what do you want to pay for? Do you want to actually pay more to sit in a convenient location, or would advice over the phone be perfectly OK for you?
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By looking for firms that deliver advice in an economical fashion, you’ll be giving yourself the best chance at getting great value on that advice. You want the main course with as few trimmings as possible.
Step 3: Compare financial advisers online before ringing providers
Financial advisers are not as easy to compare as insurance providers. With an insurance search, you can usually enter your details once into a comparison website and you will return a list of guaranteed quotes from providers. This allows you to compare like-for-like on the face of the comparison results page.
With financial advice, you will find that quotes (if any) on comparison websites are only indicative, and may just provide a ‘baseline’ for the adviser to add upon during your initial discussion.
This is a market where pricing is far more opaque and therefore if you begin placing phone calls with the first few financial advice firms that come to mind, or that you’ve seen locally, you will likely get a middle-of-the-road price.
If you’re looking to save money on financial advice then you should collect as much pricing information from online quotes before you begin making phone calls. Then, use that pricing information in the calls to actively price-check and haggle with the provider to ensure that they’re offering the best price they’re able to.
Many firms will not lower their quoted price – that’s fine too – so long as you know that you’re getting quoted the lowest price possible, then you’re helping yourself save money on financial advice.
Overall: How to save money on financial advice
It sounds like common sense – I’m asking you to treat financial advice like any other purchase.
This is actually more difficult in practise than you might think. Because quotes are harder to come-by, people are less willing to search around and end conversations on the phone when they hear a price they don’t like.
Because of the high stakes of stock market investments, people are often talked into buying more advice and broader advice than they originally wanted.
And finally, because they forget about the business model of financial advice firms, they tend to be attracted to large firms with plush offices without realising that their investing fees will be paying for all the free coffee and fresh flowers in the lobby.