How to Attain Financial Integrity in Times of Crisis

This week, our 4th blog during the Coronavirus (Covid-19) crisis, will focus on the importance of financial advice, and integrity especially at times of crisis!

Integrity is one of my core values and a part of The Wealth Consultant’s DNA. My experience in financial services, highlighted during the Global Financial Crisis in 2008/9, suggests however that not all advisers place equal importance on integrity.

It is at times of stress, that it is clear to identify those that do and those that do not. Read further to learn more about:

  • when is the best time to ask for wealth advice and build financial integrity
  • what is financial integrity
  • why is wealth management important
  • when is the best time to change your financial advisor
  • wow much does financial advice cost

Asking for wealth advice and building financial integrity

For the benefit of those new to our blog, The Wealth Consultant is a free to use digital wealth platform helping clients to achieve financial peace of mind, a tall order in the current environment. However, it is at unprecedented times like these, and as some may argue not seen since WW2, that we must keep our head, or risk losing our mind, we must “Keep Calm and Carry On”, in so far as that is possible. This is the best time to take control of your finances and secure your future. With Coronavirus shaking the global economy, there is no better time for you to achieve financial peace of mind.

What is financial integrity

Financial integrity translates to adopting consistent behaviour while taking strategic financial actions in order to maintain wealth and attain long-term monetary goals. Financial integrity can be met by adopting a proactive attitude towards achieving your business goals through financial management and wealth planning.

Financial integrity entails strategic financial actions, such as: keeping expenses under control, making savings, adopting tax planning, acquire financial insurance for your assets, investing in your retirement, and planning your family wealth for future generations.

Why is wealth management important

In the UK, money is the #1 cause of stress—ranking above physical health, work, or family. However, as identified by BlackRock only 6% of UK adults have ever received financial advice. 

When people begin investing, they see immediate emotional benefits compared to non-investors. In fact, investors are 16 percentage points happier, and 23 percentage points more positive about their well-being. So why aren’t more people taking steps to invest? Today’s infographic “Bridging the (advice) Gap” from BlackRock, and shared by The Visual Capitalist, outlines the barriers people face, and how wealth tech can help address these issues at scale. Read here

The Wealth Consultant, being a digital platform itself, endorses wealth tech, and as such has recently written a guide to “Going Robo”. Read here

When is the best time to change your financial advisor

Whilst we firmly believe that receiving financial advice is important, ensuring you are getting the right advice for your personal circumstances is critical. Over the coming months, many clients will find themselves questioning their existing wealth management arrangements; this is perfectly natural in the current market environment.

Increasingly I am asked “should I change or move adviser or wealth manager in such times”, and my simple answer is: “no, not yet!”, however, if you have any doubts, it does present you with the time to consider your options should you feel a move is on the cards.

Questions to ask yourself before changing your financial advisor

When analysing integrity within wealth management and financial advice, there are a number of things that you should consider before changing your financial advisor:

  1. Is your wealth being appropriately managed and invested in suitable investments for you?
  2. How well were your investments protected during the recent downturn, and to want extent have your investments participated in the recovery to date? 
  3. Has your adviser/manager communicated with you effectively and provided service levels and advice that reinforces your relationship and trust.
  4. Has this crisis being used as an opportunity to excuse poor performance and service? 
  5. How much are you paying and how many different fees are eating into your returns? 

To put this into context, I will share the situation of real clients in relation to each of the above points. It may ring true, and cause you reason to question the integrity of your financial adviser.

  1. One IFA had invested their client’s entire SIPP in an overly complicated and expensive commercial property transaction. The client is now over 70, and retired, he has no liquidity within his SIPP and has missed the opportunity to draw down 25% tax-free. No suitability was carried out for this investment.
  2. Some client portfolios held significant amounts of cash going into the crisis, so as long as their wealth manager started to reinvest at the bottom, and continues to drip cash into the markets, they will fare quite well. Those heavily invested in equities going into the crisis will have suffered the largest drawdown, but if investment held through a downturn, will bounce back too.
  3. Some clients have received “corporate” updates around COVID-19, but have lacked the personal touch from their individual wealth managers or adviser. This is a relationship business after all, and a chance for managers and advisers to stand apart from the crowd, and earn the trust of their clients and to reinforce confidence and peace of mind.
  4. One IFA has consistently claimed his involvement had added 3% to performance per year. The crisis has provided time for the client to look back over the years and question this. Suffice to say the IFA, when pushed could not quantify these claims, and backed down, not before asking for a fee increase!
  5. Far too many clients, do not understand exactly how much they are paying and pay far too much. One client, as do many, pays an IFA an annual fee for virtually no advice, as well as Investment management fees, fund management fees, and a host of other associated costs and fees. 

How much does financial advice cost

All of these clients have recently changed the wealth manager of advisers with our help. The wealth consultant strongly believes that where financial advice is needed in addition to investment management, that you are better going to a wealth management firm that can offer both services in house. Clients benefit from far more competitive fees (circa 1.25% all-in), as well as having a single point of contact looking after your financial affairs, and thus providing you peace of mind.

The Wealth Consultant produced a guide “Making Sense of Wealth Management fees”. Read Here

Fee transparency is still lacking in the wider industry, especially amongst IFAs, and brings integrity, or lack of, into the sharpest focus. To better understand the long term impact of fees on your investment return, Vanguard has written an excellent article (albeit designed or an American market the mathematics remain true) titled “Don’t let high costs eat away your returns”. Read here 

The Wealth Consultant is here to help you assess your current situation, to hold your hand through these testing times, and to give you peace of mind. If needs be, and at the appropriate time, we can introduce you to alternative advisers/managers who may be better placed to serve your needs.

Please do get in touch with any questions or comments, and if you need help in managing your wealth, make an enquiry today!

Keep well, Keep Calm and Carry On.