What a Financial Adviser Does That a Platform Can't

An investment platform is designed to help you manage investments held through that platform. It may offer tools to help you compare funds, monitor performance and understand your portfolio.

But your investments are only one part of your finances.

You might also have workplace pensions, cash savings, a mortgage, a personal pension and other investments held elsewhere. You may have children to support through education and into their own homes, plans to retire early or a goal of leaving money to your family.

A financial adviser can look at how these different pieces of your life could better work together to help you achieve the things that are important to you.

When you invest, you need to decide how much risk you’re comfortable taking.

Generally, investments with greater potential for growth also carry a greater risk of losing money. Investments that offer lower growth potential may be less volatile, although this isn’t guaranteed.

Many platforms provide questionnaires and tools to help you understand your attitude to risk – and these can be useful starting points. But it’s very difficult to truly understand how you’ll feel if you investments suddenly drop in value simply by answering a few questions in a generic questionnaire.

Financial advisers can delve deeper, ask questions that are directly relevant to your specific circumstances, and help you come to a better understanding of your appetite for risk and your ability to withstand losses.

An adviser can’t eliminate investment risk or guarantee that you’ll make money. But they can help you understand the risks you’re taking and why a particular approach may suit your needs.

Building up a pension is important, but working out how to use it in retirement can be just as challenging.

You may have several pension pots, each with different investment choices and charges. You might also have a Stocks and Shares ISA, cash savings and an entitlement to the State Pension.

How do you bring everything together to produce an income you can live on?

An investment platform might provide calculators and projections to help you estimate what your pension could be worth. However, they can’t adapt their calculations to your specific set of circumstances and goals.

A financial adviser is qualified to help you get more accurate figures and understand:

• When you can afford to stop working
• How much income you will need each year for the type of retirement lifestyle you want
• When you should start taking money from your pensions
• Whether you should use your pension, ISA or other savings first
• How you can ensure your money lasts throughout retirement.

They can also help you consider how your plans might be affected by inflation, investment performance and the possibility of living longer than expected – all very tricky things to calculate if you’re not experienced and don’t have access to sophisticated tools to help.

This can be particularly valuable if you have substantial pension savings, several sources of income or a complicated retirement plan.

Tax can have a significant effect on how much of your money you ultimately keep.

An investment platform may provide information about tax rules or tools to help you understand your allowances. But it won’t necessarily assess how different financial decisions could affect your overall tax position.

A financial adviser will help you understand the tax implications of your financial plan and, where appropriate, recommend ways to make better use of available allowances. They will also keep abreast of changes in the tax rules that could affect you.

Note: Financial advice and tax advice aren’t always the same thing. Some advisers provide tax planning as part of their service, while more complex situations may require a specialist tax adviser. A financial adviser should be able to flag when a tax specialist is necessary.

Watching your investments fall in value can be unsettling, particularly if you’ve spent years building up your savings.

When markets become volatile, you might be tempted to sell your investments and move into cash until things settle down.

The difficulty is that nobody knows exactly when markets will recover. Selling after a fall can turn a paper loss into a realised loss, and you could miss out on a subsequent recovery.

An investment platform can show you what’s happening to your portfolio and provide information about market movements. But it can’t necessarily give you personalised reassurance about whether your investment strategy still makes sense for your circumstances.

An adviser who understands your financial goals can help you put short-term market movements into perspective.
They can review whether your investments remain appropriate, explain the potential consequences of making changes and help you consider your options before acting.

That doesn’t mean you should never change your investments. Sometimes your circumstances or goals genuinely change, and your strategy needs to change with them.

The important thing is to make decisions for the right reasons, rather than reacting purely to market headlines.

Your financial needs can change considerably throughout your life.

You might receive an inheritance, sell a business, get divorced, pay off your mortgage or decide to retire earlier than expected.

These events can leave you facing important financial decisions, sometimes involving sums of money you haven’t managed before.

A platform can provide access to investments, but it won’t necessarily help you work through all the financial decisions surrounding these events.

An adviser can help you consider your options in the context of your wider financial goals and identify where you might need additional specialist support.

If you’ve built up significant savings or investments, you may want to think about what happens to that money when you die.

You might want to leave money to your children or grandchildren, help family members financially during your lifetime or make sure your partner is provided for.

These decisions can involve pensions, property, investments, inheritance tax and estate planning.

An investment platform can help you manage your investments, but it won’t necessarily help you build a plan for passing on your wealth.

A financial adviser can help you understand how your assets fit into your estate planning and discuss options that may help you meet your goals.

Inheritance tax rules can be complicated and change over time. The right approach will depend on your family circumstances, the assets you own and the rules in force at the time.

You might make sensible investment decisions today, only to find that your circumstances look very different five years from now. Perhaps you’ve changed jobs, received an inheritance, had a change in health or moved closer to retirement.

An investment platform will continue to provide access to your account, but you’ll need to decide whether your investments and wider financial plans still meet your needs.

A financial adviser can review your circumstances with you and help you consider whether any changes are needed.

Depending on the service you agree, this might involve regular reviews of your investments, retirement planning, tax considerations or updates to your wider financial strategy.

Ongoing advice isn’t essential for everyone. If your finances are straightforward and you’re comfortable managing them yourself, occasional reviews or one-off advice may be enough.

But if you value having someone to turn to when your circumstances change, an ongoing relationship with an adviser could be useful.

Investment platforms have made managing your money easier and more accessible than ever. For many people, DIY investing remains a sensible choice.

But a platform and a financial adviser do different jobs.

A platform gives you the tools to manage your investments. A financial adviser can help you understand how those investments fit into your wider finances, plan for retirement, consider tax implications and make important decisions as your circumstances change.

You don’t need to pay someone to manage every aspect of your money. But if you’re unsure whether your finances are working together as effectively as they could, professional advice may be worth exploring.